Sainsbury's Q3 & Christmas Figures: What The Analysts Said

By Steve Wynne-Jones
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Sainsbury's Q3 & Christmas Figures: What The Analysts Said

UK retailer Sainsbury's has posted a 1.1% decline in like-for-like sales in the third quarter, including the Christmas period, however grocery sales at the group were up 0.4%.

Commenting on the group's performance, chief executive Mike Coupe said that he believed Sainsbury's is "well placed to navigate the external environment and remain focused on delivering our strategy".

Here's how leading retail analysts viewed its performance:

Russ Mould, AJ Bell

“Sainsbury’s chief executive Mike Coupe says Christmas came late for the supermarket, yet one wonders if it happened at all given a miserable 1.1% drop in third quarter like-for-like sales. General merchandise sales which include Argos looked really weak with a 2.3% decline in the period and margins also remained under pressure.

“The big question now is what will happen to Sainsbury’s if it doesn’t merge with Asda. Sales momentum is poor and the business still seems to be having problems with empty shelves according to posts from its customers on social media. Sainsbury’s needs Asda to help it get out of trouble and give it the strength to fight off the competition from discounters Aldi and Lidl. Failure to secure a deal will leave it clearly exposed as the weakest player in the sector with no plan B with which to fight back.”


Clive Black, Shore Capital

"Within Sainsbury's core as we see it, the Group's grocery division, management reports that sales in its substantial convenience division rose by 6.0% whilst its online food division delivered 3.0% higher sales year-on-year. These channels have been sustaining expansion at Sainsbury Supermarkets top-line for some time, meaning that its core stores have been losing volume, particularly taking whatever inflation the business incurred into account.

Indeed, Sainsbury Supermarkets has now been lagging the UK grocery market for sometime, which is a concern to us from a perspective of competitiveness and operational gearing.

"Management has, perhaps understandably, been tetchy with commentary surrounding store standards at Sainsbury Supermarkets in recent times. Mike Coupe, the Group's CEO, is correct to say, as he did, that most folks can go into a large number of food stores and find gaps in availability and empty shelves most days. Whilst so, we have noticed that Sainsbury had poor availability and wider store standards for sometime now, and we are not alone, in our view."

Richard Lim, Retail Economics

"These results aren't disastrous but demonstrate the significant challenges faced by the big grocers. Fiercer competition from the discounters, massive price investment from key competitors and shifting shopper behaviour have created a pressurised trading environment. Market share continues to slip away to the German discounters.


"The decline in non-food reflects the wider slowdown in consumer confidence as cautiousness shown towards discretionary spending. Hard-fought sales in a heavily-discounted environment will put profitability under further pressure.

Catherine Shuttleworth, Savvy

“A disappointing result for Sainsbury's this morning - clearly a challenging Christmas period and sluggish activity on general merchandise sales has impacted the sales line leading to a -1.1% position. There’s lots for the business to focus on to get back on point including improving perception on in-store availability.

"However the real concern has to be general merchandise sales and lack of customer spending on discretionary items. We know that Xmas gifting was down 25% this year and Sainsbury's has clearly been impacted by that.”

Bruno Monteyne, Bernstein Research

"Groceries sales growth of +0.4% was behind consensus by -40bps. With a positive contribution from space growth (SBRY opened stores in the last year), Groceries LFL would have been lower, i.e. worse than the +0.6% Retail LFL Morrisons posted yesterday. That is consistent with the performance seen in yesterday's Kantar data. Inflation was cited to be at its lowest rate for two years, and the company indicates that they are inflating at a slower rate than peers.


"Management concerns on the GM market were warranted. GM sales growth of -2.3% was -170bps below consensus amidst 'highly competitive and very promotional' retail markets. Part of the weaker sales growth can be explained by a pullback in promotional activity during Black Friday in a trade-off with margins. They still managed to outperform the market over the quarter and Xmas was a stronger period for them (they claim 'strong sales growth in key Xmas weeks' but do not quantify the level of growth), but margins 'remain under pressure'."

Martin Lane,

"The UK’s second-biggest grocery store has blamed customers and their cautious spending for the fall in sales, yet discount rival Aldi announced record sales in the same quarter, so I think it’s safe to say Sainsbury’s need to re-evaluate the decision not to slash their prices around Black Friday.

"The supermarket giants are all facing turbulent times with competitive pressure from both discount rivals and online sales. I suspect this may just be the tip of the iceberg for the industry, shopper's habits have changed, purse strings have tightened and shopper reluctance to pay full price is very much a reality. If Sainsbury’s want to remain at the top they must look at their pricing or lose custom to stores who keep it cheap with their no-frills approach."

Fiona Cincotta,

"Recent industry data was already pointing to a sales slump for Sainsbury's but the extent of this fall is worse than feared. Sainsbury's is clearly smarting from a fresh competitive assault by the German discount retailers. Aldi and Lidl's cheaper offerings have proven harder for shoppers to resist during a testing Christmas trading period blighted by heightened Brexit uncertainty.


"Sainsbury's has reiterated its annual cost-savings target but its previous profit guidance is notably absent from today's announcement. That doesn't mean the guidance has been dropped, though these poor sales figures will heighten fears it's vulnerable to a downgrade.

"Interestingly, Sainsbury's takeover target Asda was the best-performing big retailer over Christmas, intensifying the sense of urgency for a deal to be sealed. Clearance by the competition regulator, however, remains far from assured."

© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.

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