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Sainsbury’s gets dragged back into general grocery sector malaise

Sainsbury’s fall in like-for-like sales has brought to an end two years of modest sales increases and shows that it cannot escape the deeper malaise affecting the UK grocery sector.

The former beacon of hope in a troubled market posted a fall of 0.8 per cent in like-for-like retail sales when fuel is excluded as continuing food price deflation took its toll.

Chief executive Mike Coupe said: “Sainsbury’s is well-positioned. Our core food business offers customers choice, quality and a clear value proposition. General merchandise and clothing continue to perform well with good sales growth across both businesses, and we continue to see encouraging results from Sainsbury’s Bank, a significant opportunity for long-term growth.

“Market conditions remain challenging. Food price deflation continues to impact our sales and pressures on pricing mean the market will remain competitive for the foreseeable future. However, we are confident that our strategy to be a trusted multi-channel, multi-product and services retailer is delivering and will enable us to continue to outperform our major peers.”

Despite the fall in sales, Coupe said the move away from multi-buy promotions continued to prove effective for the retailer as it noted volume growth for the quarter. As it stands, some 23 per cent of goods are now on offer compared to 30+ per cent across the rest of the market.

There was some good news for the supermarket chain however with total group sales increasing by 0.3 per cent over the past three months, a figure management attributed largely to a strong set of results from its bank division.

It's now looking forward to the Euros and the one-off trading boost it will likely provide.

"It's nice business to have when it’s there," said Coupe.

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