Sainsbury's sees sales growth

UK supermarket Sainsbury's today reported a 1.7% rise in fourth quarter sales as growth continued to slow, but said the result capped a "strong year" for the retailer.

UK supermarket Sainsbury's today reported a 1.7% rise in fourth quarter sales as growth continued to slow, but said the result capped a "strong year" for the retailer.

The UK's third biggest grocery chain saw like-for-like sales growth excluding fuel in the 11 weeks to March 20 drop from 3.7% the previous quarter as it came up against tough comparatives from a year earlier.

Full-year same store sales rose 4.3%, but the group warned the consumer spending environment would remain challenging over the year ahead.

Sainsbury's has reported slowing sales growth since the first quarter of 2009, as easing food price inflation and cautious consumer spending has compounded the challenge of reporting against strong comparatives.

It grew sales by 6.2% a year ago.

But analysts had expected the fourth quarter to be tougher for Sainsbury's and for the entire supermarket sector, hit by adverse weather in January and a clampdown on spending after Christmas.

It is thought that consumers have also been cutting back ahead of the general election and expected tax hikes, while Sainsbury's has had the added headache of increased competition from a resurgent Waitrose.

Justin King, chief executive of Sainsbury's, said: "While we expect the consumer environment to remain challenging in 2010, our universal customer appeal together with our accelerated growth of space for new supermarkets, extensions and convenience stores means we are well placed to make continued good progress in the new financial year."

Sales in the group's online offering rose 15%, while it confirmed further growth for its non-food ranges - at three times the rate of food, according to the firm.

Childrenswear has become a "rising star" for the firm after a good January sale for its non-food products.

The group said it was on track with plans to expand store space by 15% by March 2011, which is creating 13,000 extra jobs.

It opened six supermarkets and extended five existing stores in the latest quarter, while the company also boosted its convenience store portfolio by 24 to 51 in the three months.

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