WE CAN infer two things from Sainsbury’s latest trading performance. First, the group is not immune from the cash-conscious consumer sentiment that has been a sustained headwind for the food retailing sector over the past five years.
Second, everything is relative, and Sainsbury’s remains one of the clear winners in the grocery industry over that period.
Chief executive Justin King unveiled fairly pedestrian like-for-like sales growth (excluding fuel) of 0.9 per cent for the 14 weeks to 5 January.
That was down on the 1.9 per cent growth in the previous quarter; was its weakest for seven years, and does not compare brilliantly with the 5 per cent growth announced recently by Waitrose for a similar trading period.
However, Dalton Philips at the helm of Morrisons, for instance, would bite your hand off for Sainsbury’s decelerating growth. At least it is growing, whereas Morrisons has just divulged that same-floorspace sales actually fell 2.5 per cent in its latest trading update.
Tesco, once the leviathan of the sector but now in transition, reports today, but its numbers are unlikely to dent the perception that Sainsbury’s has been surefooted for too long now for its strategy to be considered anything other than well-conceived and well-executed.
As researchers at Kantar Worldpanel revealed earlier this week, Sainsbury’s was the only one of the four big beasts of the food retailing sector – the others being Tesco, Asda and Morrisons – to increase market share in the period up until the New Year.
Granted, it was an incremental advance, up 0.1 per cent. But in these difficult times for the high street as consumers watch the pennies, it is an achievement for retailers to just hold their ground apart from anything else.
As expected, Sainsbury’s benefited from an increasingly good sales contribution from online and convenience stores (something currently denied Morrisons but which Philips is working on).
But Sainsbury’s is not a two-trick pony. As King points out, online and convenience, while important, still contribute less than 10 per cent of group sales.
In truth, the company’s revival now is too well established to put it down to either particular business strands or Christmas tailwinds.
Banking bigwigs turned a blind eye to traders
UBS and its part in the Libor-rigging scandal shows yet again that the banking industry’s careering off the road cannot be blamed solely on dodgy traders.
Time and again in the sector, senior managers and those they answer to look to have been either cavalier or just wilfully did not want to probe what was going on in the dealing rooms.