* Q3 like-for-like sales, ex fuel, up 0.2 pct
* Outcome is 36th straight quarter of like-for-like sales
* Sees Q4 outcome similar to Q3
* Cuts like-for-like sales year growth forecast to "just
below 1 pct"
* Shares fall up to 2.7 pct
By James Davey
LONDON, Jan 8 British grocer J Sainsbury
reported its "best Christmas ever" on Wednesday but
warned that consumers were likely to tighten their belts in the
early part of 2014 and cut its sales growth forecast
"We expect customers to spend cautiously in the few months
following Christmas, in an attempt to rebalance the household
finances," Chief Executive Justin King said on Wednesday.
That caution and a revision to its sales forecast for the
full year sent the share price down by up to 2.7 percent to 359
pence, trimming a gain of 11 percent over the last year.
Though there are signs of an improving economy Britain's
major food retailers are finding the going tough as consumers'
disposable incomes remain under pressure from wage rises not
keeping up with inflation.
Analysts reckon all of the UK's "big four" grocers - Tesco
, Wal-Mart's Asda, Sainsbury's and Morrisons
- lost market share and saw like-for-like sales volumes
decline in the run-up to Christmas, reflecting a subdued overall
market and increased promotional activity.
"It's the consumer back-drop that really makes it tough. If
people haven't got the money to spend, no matter how hard we try
competitively as an industry, it won't get spent," King told
Sainsbury's which trails market leader Tesco and is battling
with Asda to be the UK's second-biggest grocer, said sales at
stores that have been open over a year rose 0.2 percent,
excluding fuel, in the 14 weeks to Jan. 4, its fiscal third
quarter, with total sales up 2.7 percent.
Though that was ahead of analysts' forecasts which ranged
from flat to down 1 percent and represented a 36th consecutive
quarter of underlying sales growth, it was a slowdown from
second-quarter like-for-like growth of 2 percent.
Chief Financial Officer John Rogers said he expected a
similar outcome in the fourth quarter and revised like-for-like
sales growth expectations for the full current year to "just
below 1 percent" from 1-1.5 percent previously.
King said the quarter was characterised by a "very tough
sales environment" throughout October and November, but with
record numbers of customers and strong sales in the key period
The "big four" are also being squeezed on market share
between discounters Aldi and Lidl and
up-market grocers Waitrose and Marks & Spencer.
Waitrose reported on Wednesday a 3.1 percent rise in
like-for-like sales for the five weeks to Dec. 31, while the
Co-operative Group posted a 1 percent increase in the Christmas
Aldi and Lidl both said on Tuesday they enjoyed record
trading at Christmas. Tesco updates on Thursday and is forecast
to report a fall in UK sales at stores open over a year,
excluding fuel and VAT sales tax, of 0.5-2.5 percent for the six
weeks to Jan. 4.
Asda said on Monday it saw a good performance at Christmas
both in store and online but will not release figures until Feb.
20. Morrisons is due to update on Jan. 20.
"The competitive heat in 2014 can be expected to go up a
gear as the hard discounters in particular are given less of a
'free-run' by what we deem to have been collectively
sleep-walking and somewhat complacent and promotionally
intoxicated superstore operators," said Shore Capital analyst
Sainsbury's strategy is focused on own-brand products and
investing in online and local convenience store channels.
In its third quarter online grocery sales rose over 10
percent, while convenience sales were up nearly 18 percent. That
meant like-for-like sales in its core stores were down.