* Q1 like-for-like sales, ex fuel, down 1.1 pct
* 2nd straight quarterly fall after 9 years of growth
* Q1 total sales up 1.0 pct, ex fuel
* CEO Justin King to be succeeded by Mike Coupe after July 9
* Shares up 1.8 pct
(Adds detail, CEO, commercial director, analyst comments,
By James Davey
LONDON, June 11 British grocer J Sainsbury
posted a second straight fall in quarterly underlying
sales, highlighting the challenges facing its new CEO as the
long-serving Justin King steps down amid subdued consumer demand
and mounting competition.
King, credited with reviving Sainsbury's fortunes during a
decade at the helm, will be succeeded by commercial director
Mike Coupe after the firm's shareholder meeting on July 9.
The management change comes at a time when the UK grocery
sector is in a state of flux. Though consumers are benefiting
from lower food price inflation and reduced fuel prices, they
are continuing to spend cautiously and industry sales are
growing at the slowest rate in over a decade.
Consumers are shopping around to save money and are wasting
less, shying away from big weekly shops to buy little and often
in local convenience stores and buying more online.
At the same time, discounters Aldi and Lidl
and upmarket Waitrose and Marks & Spencer are
taking market share from the middle ground, leading market
leader Tesco and No.4 Morrisons to launch price
cuts that analysts fear could squeeze industry profit margins.
"I would have preferred a strong positive number as my last
quarter but the key thing to point to is how strong our
performance remains versus our grocery competitors," King said
on Wednesday, adding he was confident the firm would outperform
rivals this year, helped by its fast-growing convenience store
and online businesses and its popular own-brand ranges.
Sainsbury's, which is battling with Wal-Mart Stores'
Asda to be the UK's No. 2 supermarket, said sales at stores open
over a year fell 1.1 percent, excluding fuel, over the 12 weeks
to June 7, its fiscal first quarter.
That compared with analysts' forecasts of down 0.5-1.5
percent and a fall of 3.1 percent in the previous quarter - a
decline that followed nine unbroken years of sales growth.
Last week Tesco reported a 3.8 percent fall in first-quarter
like-for-like sales, its worst quarterly performance for 40
years. Last month Morrisons posted a 7.1 percent slump in
first-quarter sales, though Asda reported a 0.1 percent rise.
Data published last week confirmed Asda as the best current
performer of the "big four" UK grocers, with its year-on-year
market share up 0.1 percentage points to 17.1 percent, while
Sainsbury's slipped 0.2 points to 16.5 percent.
Shares in Sainsbury's, down nearly 10 percent so far this
year, were up 2 percent at 0950 GMT.
"Sainsbury's may be feeling pleased it is beating its two
(UK) quoted rivals in lfl (like-for-like) sales, in that it is
losing sales at a slower rate, but it is still losing lfl
sales," said HSBC analyst David McCarthy.
He noted that when growth from convenience stores, store
extensions, relatively new selling space and the internet was
stripped out, Sainsbury's underlying sales volumes were likely
down 3-4 percent.
The firm kept its forecast for underlying sales growth for
the 2014-15 year similar to the 0.2 percent achieved in 2013-14
- far better than expectations for Tesco and Morrisons - and
said it would stay competitive on prices.
"We're playing our part in this price skirmish, we're
standing toe to toe with our competitors and our pricing has ...
never been more competitive than it is today," said King,
without giving details on how much this was costing the firm.
Sainsbury's reckons it can set itself apart from rivals with
a strategy that focuses on own-brand products, and on the
quality, provenance and ethical credentials of its food.
Coupe, instrumental in much of Sainsbury's success over the
last 10 years, is confident the firm can avoid the turmoil that
management change has seen at retailers such as Tesco.
His accession, announced in January, had been planned over a
long period and, and the firm's wider leadership team was very
stable and experienced, he said.
"The business is in great shape," Coupe said. "I'm confident
that we can continue to emphasize our points of differentiation,
whilst maintaining our price position and growing the parts of
the business that we know have got future upside potential, like
online and convenience."
(Editing by Kate Holton and Mark Potter)