Christmas woes for Sainsbury’s as Morrisons wholesale boosts sales

UK supermarket Sainsbury’s saw a chill over Christmas as its like-for-like sales fell 1.1%, in the third quarter, while rival Morrison saw a sales boost of 3.6% on the back of its wholesale division.

Sainsbury’s Group chief executive Mike Coupe insisted grocery sales of 0.4% were ‘solid’ across the third quarter, which covers the key Christmas period, and includes the 15 weeks to 5 January, and there was success from its online and convenience channels, which grew 6% and 3% respectively from the same period last year.

“Retail markets are highly competitive and very promotional and the consumer outlook continues to be uncertain. However, we are well placed to navigate the external environment and remain focused on delivering our strategy,” he said.

However Shore Capital research analyst Clive Black called the result “concerning”, pointing out that the expansion of the online and convenience stores pointed to a fall in the supermarket’s core stores, which had been lagging behind the UK grocery market for some time.

He pointed out that it made the supermarket’s proposed merger with Asda, which is subject to the UK Competitions & Market’s Authority , “more critical than ever to Sainsbury’s medium-term prospects”.

Figures released by KantarWorldpanel yesterday showed that while Sainsbury’s market share dropped by 0.3 percentage on the back of its Christmas sales, Asda was the biggest winner out of the big four grocers over the festive period, recording growth of 0.7%.

Morrisons

Meanwhile Morrisons saw sales across its stores rise 0.6%, slightly higher than expectations but still well below last year’s 2.1% festive growth, and sales in the third quarter of the year at 1.3%.

Chief executive David Potts welcomed the retailer’s fourth consecutive Christmas of like-for-like sales growth, but argued that consumer behaviour had changed and was more cautious.

“People became increasingly savvy and conscious of both the macro political situation in the country and how that may unfold in 2019 and how it may affect them personally,” he said.

There was, however a more promising result from its wholesale division, which supplies McColls and Amazon, which showed a 3% uplift – but it failed to stop a fall in the share price, which fell 4%.