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Sainsbury 8217 s reports Christmas sales drop

Article By: ,  Financial Analyst
January 7, 2015 11:26 AM

Supermarket chain Sainsbury's has reported a disappointing Christmas period and has warned of a "challenging" year to come.

The traditionally busy festive period did not bear fruit for the supermarket which reported a total sales decrease of 0.4 per cent in the 14 weeks to January 3rd. It was similar story for Sainsbury's stores which had been open at least a full year with sales dropped by 1.7 per cent, excluding fuel, during the same period.

Sainsbury's drop in like-for-like sales during Christmas was the first time this had occurred for more than a decade. However, the silver lining in these rather negative figures was that the supermarket had performed marginally better than many City analysts had predicted in the run-up to the festive period.

There was also a boost in the company's share price which rose by four per cent in early trading in the FTSE 100 on Wednesday (January 7th). Tesco and Morrisons also enjoyed a boost of two per cent in share price. Despite this short uplift, Sainsbury's chief executive Mike Coupe warned of challenging times ahead.

Mr Coupe said: "The outlook for the remainder of the financial year is set to remain challenging, with food price deflation likely to continue. Our performance in the third quarter showed an improving trend quarter-on-quarter."

While Sainsbury's was faltering over the Christmas period, rival Waitrose was prospering. The upmarket supermarket chain recorded a 2.8 per cent increase in like-for-like sales in the five weeks to January 3rd, compared to the same period a year earlier. The John Lewis-owned business recorded a 26.3 per cent jump in online grocery sales, bucking the trend in the grocery sector.

The strong performance puts Waitrose in a strong position going into the coming months allowing it to fight back against discounters such as Aldi and Lidl.

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