Reuters: Global Markets: Sainsbury ups pressure on Tesco with sales rise

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Sainsbury ups pressure on Tesco with sales rise Mar 21st 2012, 11:31 By James Davey LONDON | Wed Mar 21, 2012 7:31am EDT LONDON (Reuters) - J Sainsbury Plc (SBRY.L), Britain's third-biggest supermarket group, beat forecasts for fourth quarter sales growth as it won market share, including from ailing industry leader Tesco Plc (TSCO.L). Shares in Sainsbury's, which lags Wal-Mart Stores Inc's (WMT.N) Asda and Tesco by annual revenue, rose 3 percent on Wednesday after it said sales at stores open more than a year increased 2.6 percent, excluding fuel, in the 10 weeks to March 17. That beat analysts' average forecast of 2.1 percent, according to a company poll, and was slightly higher than its performance in the previous quarter. "We continue to outperform the market and gain market share," Chief Executive Justin King told reporters, pointing to the success of Sainsbury's "Brand Match" pricing promotion and sales from its fresh food counters, which he said were "growing faster than at any other retailer." He also highlighted sales from its convenience stores, as well as online, which was growing at more than 20 percent, and growth in non-food items ahead of the market. Sainsbury's peers are yet to report on periods which significantly overlap. However, market share data has shown the firm at or near the front of the sector in recent months, while Tesco has lost ground. In January Tesco issued its first profit warning in living memory and last week it parted company with the head of its UK business. Shares in Sainsbury, up 9 percent over the last six months, were up 9.9 pence at 315.2 pence at 1041 GMT, valuing the business at 5.89 billion pounds ($9.34 billion). "We believe Sainsbury should keep its sales momentum over at least the next couple of quarters," said Espirito Santo Investment Bank analyst Caroline Gulliver. King said Sainsbury was well placed to benefit from the nation's roster of summer events, though he did not quantify any anticipated uplift. "We think there are some reasons in the year ahead to be cheerful, the (Queen's) Diamond Jubilee, the Olympics and the Paralympics, the first and last of which we have sponsorship association with, are wonderful opportunities for us and our customers to celebrate," he said. "We expect these to underpin our performance going forward." King did, however, caution that the economic climate was likely to remain challenging. He said 10 percent sales growth in the firm's 'basics' range and 20 percent sales growth in its upmarket 'Taste the Difference' range reflected consumers "saving money so that they can still enjoy special food and special occasions rather than any loosening of household budgets." Many British retailers have struggled over the last year as consumers grappled with inflation, muted wage growth, government austerity measures, worries about job security, a stagnant housing market and the fallout from the euro zone debt crisis. However, on Tuesday official data showed UK inflation edged down in February to its lowest level in over a year, keeping hopes alive that the squeeze on Britons' finances will ease this year. Later on Wednesday British finance minister George Osborne steps up to give his Budget speech for 2012-12. Separately on Wednesday shares in British video games retailer Game (GMG.L) were suspended after it said its equity was worthless. Reuters Insider interview with Sainsbury's Chief Financial Officer John Rogers - reut.rs/GDR2yX (Reporting by James Davey; editing by Kate Holton and Keiron Henderson) Link this Share this Digg this Email Reprints

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