AINSBURY’S today warned that customers are “watching every penny” as the cost-of-living squeeze tightens and warned it will get worse from here.
It saw sales down 2.4% in the last quarter with Argos and the clothing arm particularly badly hit as people tried to cut back on non-essentials.
The supermarket claims it is doing better than rivals, which if true suggests the entire sector is in strife.
Asda and Morrisons, now owned by private equity giants, will be watched closely for evidence that they are ratcheting up prices in the teeth of a likely recession.
They are no longer obliged to be quite so clear about what is happening to sales and margins. Rivals say they are already chasing profit ahead of sales growth which might make life harder for hard pressed families.
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Why you need to explore Türkiye’s Dalaman region for yourselfSainsbury CEO Simon Roberts says the business is “very conscious of the pressure on household budgets” which “will only intensify over the remainder of the year”.
He says the grocer is “doing everything we can” to keep prices low, especially on the goods people buy most often such as bread and milk.
Sales at Argos fell 10.5%, but that is compared to a period when the high street was mostly closed. General merchandise sales are down 11.2%.
Sainsbury’s is facing a vote on Thursday about the pay of its cleaners and others that are outsourced.
A pressure group, ShareAction, says it should pay the real living wage (£11.05 an hour in London) to all staff, a vote that may be seen as a litmus test for how serious the City it about Environment, Social and Governance (ESG) commitments.
Roberts, paid £3.8 million this year, repeated today that he is “proud of his colleagues”. His pay is 183 times more than the median worker at Sainsbury.
He added: “I am very clear that doing the right thing for our customers and colleagues will remain at the very top of our agenda.”
Alex Smith at Third Bridge said: “Sainsbury’s is facing the double whammy of a decline in like-for-like sales growth because of today’s cost-of-living crisis and the inflated results of last year’s COVID restrictions, plus some unpleasant flak over its stance on the real living wage.” “Discounters are expected to continue to gain market shares from the big four supermarkets. Sainsbury’s will look to reduce their margins on fresh food to be more competitive.”
Some in the City think Sainsbury is a takeover target, though that would require agreement from the biggest shareholder, the Qatar Investment Authority, which has nearly 30% of the stock.
Smith added: “Sainsbury remains an attractive takeover target. Our experts say that UK supermarkets have a high entry barrier and have been undervalued for a long time.”
Sainsbury shares today rose 3p to 211p which leaves the business valued just shy of £5 billion.
Sainsbury is losing experienced chief financial officer Kevin O’Byrne, who retires next March. He has been with the company since 2017 and is well respected in the City.
His successor is Bl á thnaid, who is presently commercial and retail finance director. She has held senior positions at Aviva and RSA. She said: “Kevin has been an excellent mentor over the last few years.”
