UK MIDDAY BRIEFING: Sainsbury's Sales Fall Could Have Been Worse

LONDON (Alliance News) - J Sainsbury reported another a drop in sales in the fourth quarter of its financial year, despite price reductions that drove volume increases across the business, but the drop wasn't as bad as analysts had feared and compared favourably with rivals.

The UK's third-largest supermarket chain said total retail sales were down 0.3% excluding fuel in the 10 weeks to March 14, and down 2.7% including fuel. Like-for-like sales were down 1.9% excluding fuel, and down 3.9% including fuel for the fourth quarter.

The drop in like-for-like sales excluding fuel wasn't as severe as the 2.3% decline analysts had expected. The figure was also better than that reported by rival Wm Morrison Supermarkets, and in line with latest figures from larger rivals Tesco and Asda.

Sainsbury's sales drop came despite a price reduction in over 1,100 products following a GBP150 million price investment in November, although the supermarket says it has seen volume growth across the food business and an average uplift of over 3% on the price-reduced products.

"We expect the market to remain challenging for the foreseeable future. Food deflation is likely to persist for the rest of this calendar year, and competitive pressures on price will continue," said Chief Executive Mike Coupe. "However, we believe that the great value and quality of our products, combined with a strong focus on developing our multi-channel offer, will enable us to outperform our supermarket peers".

Morrisons had reported a drop in like-for-like sales of 2.6% excluding fuel in the three months to February 1, while Tesco reported a drop in like-for-like sales of 0.3% excluding fuel in the six weeks to January 3, and a 2.9% drop for the 19 week period ended January 3. Asda had reported a 2.6% decline in like-for-like sales in the 12 weeks to January 4, although it wasn't clear if that figure excludes fuel.

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Markets: UK stocks are trading mixed, with the FTSE 100 slightly higher. Oil-related stocks are amongst the best performers in London despite continued pressure on oil prices.

Wall Street is set for a flat to lower start, with stock futures indicating that the DJIA and S&P 500 will open down 0.2% and the Nasdaq 100 will open flat.

FTSE 100: up 0.2% at 6,816.78
FTSE 250: down 0.2% at 17,169.00
AIM ALL-SHARE: up 0.1% at 716.33
GBP-USD: down at 1.4776
EUR-USD: up at 1.0634
GOLD: down at USD1,151.85 an ounce
OIL (Brent): down at USD53.10 a barrel
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Afternoon Watchlist (all times in GMT)

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Imagination Technologies - Trading Statement
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UTV Media - Full Year Results
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Earthport - Half Year Results
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Wednesday's Key Economic Events (all times in GMT)

01:30 China House Price Index
05:00 Japan BoJ Monthly Economic Survey
08:00 EU Non-monetary policy's ECB meeting
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09:30 UK Bank of England Minutes
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