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Sainsbury's in Christmas sales victory claims

SUPERMARKET chain J Sainsbury proclaimed itself the Christmas winner among the big four grocers after scooping record-breaking takings over the festive season.

But news of its weakest rise in sales since 2005 saw investors send its shares down 2.6%.

Sainsbury's, which has 70 stores in Scotland, saw like-for-like sales growth of 0.9% in the 14 weeks to January 5, the third quarter of its financial year.

Chief executive Justin King was keen to trumpet the grocer's 32nd consecutive quarter of sales growth.

But the City focused on the fact expansion was well below the 2.1% it recorded in the same period last year and lagged behind the 1.9% in its previous quarter.

Once store extensions and price inflation are taken into account analysts estimate sales volumes fell around 2.25%.

Mr King said: "We are the only grocer to be growing market share."

Finance director John Rogers said: "We see ourselves as being the Christmas winner."

Wm Morrison earlier this week revealed that it suffered a 2.5% fall in like-for-like sales in the six weeks to December 30.

Market leader Tesco, which had a disappointing Christmas in 2011, will report to the City today.

Philip Dorgan, analyst at Panmure Gordon, said: "Trade remains tough and is likely to get tougher across the food retailing sector, as rising inflation eats further into consumers' disposable incomes.

"In common with its peers, Sainsbury's is finding it difficult to grow profits, despite substantial capital expenditure."

One reason for the slowdown in growth is an apparent switch away from expensive brands.

Sainsbury's reported that sales of its own-brand products grew at three times the rate of branded goods.

Its main "by Sainsbury's" range saw 5% growth while the top-end Taste the Difference range was up 8%.

Sales of its Champagne and prosecco were 15% up on last year and clothes sales rose 10%.

The company said customers are buying fewer items than a couple of years ago and making more use of leftovers.

Mr King, who again denied reports he is poised to leave the company, said: "We expect this challenging backdrop that has lasted for several years to persist."

Sainsbury's, which is the market number four in Scotland but the third-largest UK-wide, said online sales grew at more than 15%. Its convenience stores managed gains of more than 17%, accounting for two-thirds of its like-for-like growth.

Phil Dorrell, director of consultancy Retail Remedy, said: "Sainsbury's was fortunate to have hit the festive period running and can now go into the New Year proper with a degree of momentum behind it."

Sainsbury's shares closed at 329.2p, down 9.8p.

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