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Sainsbury's upbeat despite sales growth slowdown


Sainsbury’s has reported a slowdown in sales growth but says it has the “right strategy in place” in a competitive market.

The country’s second-largest supermarket chain said like-for-like sales were up 0.2% in its first quarter to the end of June.
That compares to a rise of 0.9% during the previous three months.
Shares rose by 1.5% in early trading as the performance was better than the market had expected amid predictions of a slight fall in sales.
There has already been evidence of a boost to the grocery sector from the Royal Wedding in May and hot early summer weather following a torrid period for the high street particulary.
Sainsbury’s said price cuts had helped bring inflation – the fluctuation in the overall cost of goods to consumers – down by 1.5% on the first three months of the year during the last period.
The chain, which also owns Argos, said it had secured a £3.5bn funding package “on attractive terms” for its planned merger with rival Asda – a deal that is currently being scrutinised by the Competition and Markets Authority.

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Video: Sainsbury’s and Asda defend merger

Chief executive Mike Coupe said of the trading update: “The headline numbers reflect the level of price reductions we have made in key areas like fresh meat, fruit and vegetables since March.

“The market remains competitive; however, we have the right strategy in place, and our proposal to combine Sainsbury’s and Asda will create a dynamic new player in UK retail, with the scale to give customers more of what they want today and create a more resilient and adaptable business for the future.”
The proposed £14bn tie-up has received a hostile reaction from MPs, who accused bosses last month of “talking baloney” over the effects such a deal would have on suppliers.
The chains have said the merger would allow them to pass on a 10% reduction in costs to shoppers.
Commenting on the market reaction to the first quarter performance Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “‘We know that consumers were in fine fettle in May, as the Royal Wedding and some good weather lifted spirits, and that’s helped Sainsbury’s to achieve a positive period of trading.

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“The June sunshine and the start of the World Cup no doubt also provided a boost to Sainsbury’s coffers, as shoppers came home with TVs and barbecues.
“Conditions remain challenging though, and while the top line is just about growing, Sainsbury’s efforts to lower prices mean that may not entirely feed through into profits.”

Source: Sky

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My name is Joel Bissitt. I have been an entrepreneur for 24 years and have run many small businesses across various sectors. For the last 10 years I have worked mainly within online media, franchising and small business start-ups. I am an author of various websites including Franchise UK https://www.franchise-uk.co.uk

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