J Sainsbury PLC (LON:SBRY) continued to badly underperform its supermarket rivals over the key Easter period, industry data showed on Tuesday, a day ahead of the group's final results.
The monthly grocery market report from Kantar showed sales from the Holborn-headquartered group declined 1.2% in the 12 weeks to 21 April to £4.2bn.
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It was the only one of the ‘big four’ not to increase sales during the period, as the grocery market as a whole grew total sales 2.0% year-on-year to £27.3bn, with a record £2.5bn spent during the Easter week. Grocery inflation was 1.4% for the 12-week period.
Sainsbury’s monthly sales figures have been stumbling badly for some time as management put all their eggs in the basket of a proposed merger with rival Asda, which is owned by Walmart Inc (NYSE:WMT). Last week, however, the competition regulator blocked the deal, leaving a big question mark over the head of chief executive Mike Coupe.
One ray of hope for Coupe as he ponders his plan-B was that double-digit online growth helped Sainsbury’s edge ahead of Asda to become the second-biggest supermarket with 15.4% of the market, despite Asda increasing sales 0.3% to take market share of 15.2%.
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Tesco PLC (LON:TSCO), already celebrating the collapse of the deal that would have seen it overtaken as the UK market leader, has more reason to cheer as its sales rose 1% to £7.5bn for a 27.3% market share.
“Despite movement at the top of the table, the phrase ‘big four’ continues to hold meaning and Morrisons’ 10.3% market share means it sits comfortably ahead of the fifth largest retailer, Aldi,” said Fraser McKevitt, Kantar’s head of retail and consumer insight.
Aldi continues to make up ground at pace, once again the fastest growing name in the industry, as it has been since last July, welcoming additional 823,000 shoppers through its doors to grow sales 11.6% and its market share by 0.6 percentage points compared with last year to 7.9%.
Fellow limited-assortment discounter Lidl grew sales 8.6%, driving its market share up 0.3 points to 5.7%.
Co-op and Ocado Group plc (LON:OCDO) were the only other retailers to gain market share on last year, with the co-operative group’s sales rising 4.5% to grab a 6.1% share and the online specialist up 6.8% for a 1.3% share.
Sainsbo's results tomorrow
On Wednesday, Sainsbury is expected to post a 1.5% fall in like-for-like (LFL) sales, excluding fuel, for the fourth quarter after a 1.1% decline in the third quarter, according to analysts at Jefferies International.
The underlying 1.1% LFL decline reflects a 0.8% fall in grocery sales in the past quarter, offsetting a 0.5% increase in Argos general merchandise sales and a weather-induced recovery in clothing, the analysts said.
“Inevitably, the focus will be on outlook tone for the year ahead, given the extent to which SBRY's sales lag is starting to look well entrenched.”
For the full-year, Jefferies forecasts total sales of £28.8bn, compared to £28.5bn in 2018, with retail sales up 1.1% to £28.2bn. The investment bank predicts group earnings (EBIT) of £703mln, up from £694mln last year.
Shore Capital, which forecast profit before tax of £646mln and earnings per share of 20.1p, also flagged up worries about dividends, seeing high downside risk for the company.
"If pre and post exceptional earnings do fall over the next couple of years, which is our central expectation, then dividend flows should follow suit," analysts said, suggesting the dividend policy could be reviewed as the trajectory of payments looks to be falling.