J Sainsbury PLC (LSE:SBRY)’s sales fell 4% in the first trading quarter of 2022, as it became the latest grocer to feel the heat of consumer belt-tightening.
The British supermarket chain announced today that its chief financial officer Kevin O’Byrne is retiring at the end of March 2023, as it comes under mounting pressure to guarantee staff a living wage. It confirmed that retail finance director Bláthnaid Bergin will take over the role next year.
The chain was hoping that its latest investment in competitive pricing would have paid off, as consumer confidence continues to ebb in the high inflationary environment.
"We really understand how hard it is for millions of households right now and that's why we are investing £500mln and doing everything we can to keep our prices low, especially on the products customers buy most often,” said Sainsbury’s chief executive Simon Roberts.
"Our customers are watching every penny and every pound but they also look to Sainsbury's when they want to treat themselves, particularly at special occasions.”
Roberts has faced a backlash from employees over revelations he was due a £3.8mln pay and bonus packet in 2021 after taking a wage hit during the pandemic.
Shareholders will vote on his pay packet at this Thursday’s annual general meeting, alongside a vote on whether the chain should become an accredited living wage employer.
Its board recommended against a resolution that would guarantee all staff a living wage, on the grounds it would make the chain hamstrung to external influence. Although it claims to pay staff a living wage, campaign group ShareAction warns that impermanent staff are not guaranteed such a wage under existing policies.
Sainsbury’s grocery sales fell 2.4% in the 16 weeks to June 25, which it blamed on an artificial boost during lockdowns. Its grocery sales were meanwhile 8.7% above the pre-pandemic levels of the first quarter of 2019.
The decline in like-for-like sales excluding petrol at the pump this quarter follows Tesco’s drop in UK sales, which it attributed to its customers “facing unprecedented increases in the cost of living".
General merchandise turnover and clothing sales, including sales at Argos and revenue from the Sainsbury’s own brand, all fell compared to the equivalent period of 2021.
Argos turnover dropped 10.5%, while Sainsbury’s own brands fell 14.6%, and Sainsbury’s took a 10.1% hit on clothing retail.
Sainsbury's outlook for the full year remains unchanged as it predicts an underlying profit before tax of between £630mln and £690mln.
Its shares were up 2.3% this morning by 08:14.