UK's Sainsbury's echoes Tesco with slower quarterly sales growth
Sainsbury's Quarterly Performance and Market Context
By James Davey
LONDON, June 30 (Reuters) - Sainsbury's, Britain's second-largest supermarket group, on Tuesday joined industry leader Tesco in reporting slower underlying sales growth in its first quarter, but left its full-year profit guidance unchanged.
Impact of External Factors on Retail Sector
The Middle East conflict has pushed up energy prices, weighing on consumer confidence and spending, and adding to the challenges facing the UK retail sector and wider economy.
Sales Breakdown and Market Share
Sainsbury's, which has a UK grocery market share of 15.3%, said like-for-like sales, excluding fuel, rose 2.1% in the 16 weeks to June 20 - below the 3.1% achieved in the previous quarter.
Grocery sales rose 3.6%, while general merchandise and clothing sales fell 3.7% and sales at Argos fell 0.5%.
Comparative Performance and Analyst Commentary
The group was up against a strong comparative performance in the first quarter last year when like-for-like sales rose 4.7%, boosted by favourable weather and cyberattack-related disruption at competitors Marks & Spencer <MKS.L and the Co-op.
Analysts at Bernstein said Sainsbury's reported "an overall encouraging set of results with continued strength in grocery and better than feared Argos performance."
Comparison with Tesco and Exposure to Non-Food Sales
Earlier this month, Tesco reported first quarter like-for-like sales growth slowed to 1.8%.
About one quarter of Sainsbury's sales are non-food, making it more exposed than Tesco to any slowdown in discretionary spending.
Outlook and Profit Guidance
"We have had an encouraging start to the year but the impact of the conflict in the Middle East on our customers and our business remains uncertain," Sainsbury's said, with CEO Simon Roberts noting that "customers are looking for value now more than ever."
The group kept its forecast for full-year 2026/27 total underlying operating profit of between £975 million and £1.075 billion ($1.29 to $1.42 billion). It made £1.025 billion in 2025/26.
Prior to Tuesday's update analysts were on average forecasting £1.061 billion for 2026/27.
Share Price Performance
Shares in Sainsbury's have risen 14% over the last year.
(Reporting by James Davey; editing by Sarah Young and Louise Heavens)
