Too early to say economic downturn in UK is over, claims Sainsbury’s

Sainsbury’s, Britain’s third largest grocer, says it is too early to call an end to the country’s economic downturn, arguing that strong trading over the summer was no more than a blip.

Sainsbury’s and other retailers are still taking a cautious view of the market for the year ahead even though official data and surveys have shown an improving outlook for UK consumer spending, which generates about two-thirds of GDP.

British Retail Consortium data, for example, has suggested Britons are feeling more confident about spending money.

“While there are some economic signs that the economy is improving, you’re not yet seeing that evidenced in consumer behaviour,” Sainsbury’s chief financial officer, John Rogers, told the Reuters Global Consumer and Retail Summit yesterday.

“The blip over the summer brought about by the very good weather is just that — it’s a bit of a blip.”

Government austerity measures and low-wage growth since the financial crisis have squeezed household budgets, making shoppers cautious on spending.

Rogers said that in the run-up to Christmas he expects consumers to return to the pattern of behaviour seen over the last three years — saving money with a view to splashing out over the festive period.

British finance minister George Osborne yesterday said the economy has turned a corner.

Sainsbury’s has been outperforming its “big four” rivals Tesco, Asda, and Morrisons, with robust growth online and at convenience stores more than offsetting underlying sales falls in its traditional stores.

In June, it reported first quarter like-for-like sales growth of 0.8%, and maintained its guidance for full year growth of 1.0%-1.5%.

Sainsbury’s was alone among the big four in growing ahead of the market in the last three months, according to data from Kantar Worldpanel.