* Q4 like-for-like sales, excluding fuel, down 3.1 pct
* Sales fall follows 36 straight quarters of growth
* Firm says confident will outperform peers in year ahead
* Shares up 0.6 pct
By James Davey
LONDON, March 18 British grocer J Sainsbury's
nine-year run of quarterly sales growth came to an end
on Tuesday, underlining the pressure on the industry as a battle
over prices intensifies in a fragile economic recovery.
Britain's grocery market is growing at its slowest rate
since 2005 due to falling food price inflation and as subdued
wages growth keeps consumer spending in check.
The "big four" grocers - market leader Tesco,
Wal-Mart's Asda, Sainsbury's and Wm Morrison -
are all being outpaced by sales growth at discounters Aldi
and Lidl, while upmarket chains Waitrose
and Marks & Spencer are also gaining share.
Last week No. 4 supermarket group Morrisons posted its
lowest annual profit for five years, issued a huge profit
warning and sparked fears of an industry price war after saying
it would invest 1 billion pounds ($1.7 billion) in price cuts
over three years to win back customers from discounters.
Its statement, which followed price cutting moves from Tesco
and Asda, wiped over 2 billion pounds off the stock market value
of UK grocery retailers.
Sainsbury's said it would ensure its prices remained
competitive and had already dropped them for milk, bread and
eggs in response to rivals' recent moves.
"If and when we see that activity come forward we will match
the prices, we will maintain our price position as we always
have done," commercial director Mike Coupe, who will succeed
Justin King as chief executive in July, told reporters.
Shares in Sainsbury's, down 21 percent over the last six
months, were up 0.6 percent to 313.4 pence at 1135 GMT, valuing
the business at about 5.9 billion pounds.
"Whilst it is not losing out (to the discounters) to the
same extent as its peers, we do not believe that Sainsbury's is
blind to the challenge," said Shore Capital analyst Clive Black.
CUT AND THRUST
King said he disagreed with Morrisons CEO Dalton Philips who
said last week the extent of change the discounters had prompted
in the grocery market had not been seen since the late 1950s.
"It's wrong to characterise what's happening as something
completely new because discounters have been ever present in my
30 years (career) and there have been times when they've had
significantly larger market share than they have today," he
said, noting discounters had a share of about 12 percent in the
early 1990s compared with 7.5 percent currently.
He said price cuts were "part of the cut and thrust of this
market," adding: "The only model that grows profit sustainably
in the long term in grocery retail is a growing top line. That's
what we've achieved for nine years."
Sainsbury's said sales at stores open over a year fell 3.1
percent, excluding fuel, in the 10 weeks to March 15, its fiscal
That compared with analysts' forecasts in a range of down
2-3 percent and growth in the third quarter of 0.2 percent.
The firm faced a tough comparative number - a rise of 3.6
percent in the same period last year, when it benefited from the
discovery of horsemeat in competitors' products.
The later timing of Easter and Mother's Day also worked
against it this year.
Prior to the fourth quarter, Sainsbury's had reported
like-for-like sales growth for 36 straight quarters.
"Although some economic indicators are showing an
improvement in the health of the economy, we expect the outlook
for customers to continue to be challenging for the coming
year," the company said.
Sainsbury's said, however, that it was confident its
differentiated offer, which includes a focus on own brand
products and its Nectar loyalty card would allow it to
outperform peers in the year ahead.
The firm's total fourth-quarter sales fell 1.0 percent,