Sainsbury's halts talks on Nisa buyout

Supermarket is waiting to see outcome of review of Tesco-Booker deal

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Sainsbury’s sales fall after it scraps multi-buy deals

08 June

Sainsbury’s sales have gone back into decline after it posted a 0.8 per cent fall in like-for-like sales for the first quarter to 4 June.

This means Britain's second-biggest supermarket is again reverse after sales inched 0.1 per cent higher in the fourth quarter – the grocer's first increase in more than two years.

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Responding to the latest figures, chief executive Mike Coupe said price pressures meant "the market will remain competitive", but insisted the supermarket will "continue to outperform our major peers".

Analysts believe sales were hit by the abolition of the store's "buy one get one free" offers and its brand-match guarantee. Sainsbury's replaced those promotions with overall lower prices after a damning report by the competition regulator said multi-buy deals across the industry routinely mislead customers.

The big four supermarket chains have been embroiled in an increasingly fierce price war as German discounters Aldi and Lidl expand across the UK.

Industry chatter had predicted a bigger decline for Sainsbury's, with some forecasting it would be as high as 1.4%. Even this would have implied a decent performance in terms of transaction volumes at a time when food price deflation is running at around 1.5 per cent.

As such, the City seemed to initially shrug off news of the lesser setback, with shares rising three per cent in early trading. However, the stock later swung into a one per cent decline.

In a silver lining for the grocer, its network of smaller convenience stores enjoyed growth of more than six per cent while online sales jumped eight per cent, in part thanks to the launch of a new app. Sainsbury’s was also keen to highlight strong growth in its clothing range.

However, a massive setback could be on the horizon. The Competition and Markets Authority is examining Sainsbury’s agreed £1.4bn takeover of Argos-owner Home Retail Group to see if the deal would lead to "a substantial lessening of competition" for consumers.

Sainsbury's to reveal more poor sales figures this week

06 June

Sainsbury's will post its latest results this week, with the retail giant facing a depressing combination of weak sales and scrutiny from the industry watchdog.

Analysts expect boss Mike Coupe to admit that sales have been hit by scrapping the store's "buy one get one free" offers and the brand-match guarantee.

Sainsbury's replaced those promotions with overall lower prices after a critical report by the competition regulator said multi-buy deals across the industry routinely mislead customers. However, shoppers seem nonplussed by the change.

The Belfast Telegraph says analysts are anticipating largely flat like-for-like sales, ranging from a fall of 0.5 per cent to a gain of 0.5 per cent. However, The Sunday Times forecasts a decline of 1.4 per cent.

Kantar Worldpanel last week posted data closer to the latter prediction. It claimed that Sainsbury's saw sales fall by 1.2 per cent in the 12 weeks to 22 May, dropping its market share to 16.2 per cent from 16.5 per cent a year earlier.

Any fall would be a blow, particularly after the chain posted a 0.1 per cent rise in the previous three months - its first quarterly like-for-like sales growth for more than two years. The grocer's woe was worsened by the news that its long-time nemesis Tesco's share has risen after two years of declines, rising to 28.6 per cent from 28.3 per cent a year earlier.

Sainsbury's had been the best performer of the big four for the past year, amid an onslaught from German discounters Aldi and Lidl.

The industry predictions were made just days after the Competition and Markets Authority announced it was examining whether Sainsbury's' £1.4bn takeover of Argos could result in a "substantial lessening of competition".

All of this leaves the chain "a little in the doldrums", according to Shore Capital experts.

Frustration could be deepened by the recent revelation that Coupe's pay package nearly doubled to £2.8m last year, despite a fall in the supermarket's underlying profits.

Sainsbury's sheds market share after ditching discounts

1 June

Sainsbury's has lost its "crown" as the best performer of the under-pressure "big four" supermarket groups, reports The Guardian.

According to the latest figures from Kantar Worldpanel, sales at Britain's second-largest grocer fell 1.2 per cent for the 12 weeks to 22 May. This is Sainsbury's worst performance since last summer and comes after it decided to ditch its multibuy discounts earlier this year in favour of cheaper unit prices.

The supermarket was beaten to first place by Tesco, which has seen a continued improvement in sales after its annual slide narrowed to one per cent from 1.3 per cent for the previous period. Both of the top two retailers, which between them account for more than 45 per cent of all supermarket sales, have seen a decline in takings that is less than the rate at which prices across the sector are falling.

According to Kantar, year-on-year supermarket price deflation was 1.5 per cent for the period. Separate data from the British Retail Consortium puts the overall annual shop price deflation at 1.8 per cent for May, notes the Daily Telegraph, a drop that reflects more than three continuous years of falling prices.

Analysts say the report shows the "big four" are holding on to shopper footfall but shedding market share and sales volume. This in turn reflects the huge gains currently being made by discounters Aldi and Lidl – and the price cuts that the sector has undertaken in response.

Edward Garner, a director at Kantar, points out that that 94 per cent of Aldi and Lidl shoppers still visit at least one of the established brands every four weeks, a clear sign of a shift towards shopping around rather than being loyal to one store. The German duo have seen their market share surge 11.4 per cent and 14.2 per cent respectively and remain collectively well above ten per cent.

On a more positive note for Sainsbury's, Garner told Sky News that the store's decline was primarily due to a fall in "pack sales" that should prove to be merely a "short-term" consequence of its decision to drop multibuy discounts.

Both Sainsbury's and Tesco continue to fare better than Asda, however, which has suffered what the Financial Times describes as a "painful" 5.1 per cent fall in sales as it continues to lose price-conscious shoppers to the discounters. Morrisons has seen its own takings fall by 2.1 per cent, which Kantar says reflects the effects of store closures.

Watchdog to inspect Sainsbury's £1.4bn takeover of Argos

31 May

The UK's competition regulator is to investigate the £1.4bn buyout of Argos owner Home Retail Group by Sainsbury's.

The Competition and Markets Authority (CMA) confirmed on Friday that it had written to the two companies to inform them of its decision to review the agreed takeover. The CMA has the power to block the sale if it judges it to be damaging to consumers and can also force the two companies to sell stores in order to reduce any harmful effects on competition.

Sainsbury's says the merger will boost its total number of sites to 2,000, including concessions and click and collect points, notes Retail Gazette. The supermarket giant has already said it will close around 200 Argos stores, with the idea of relocating them to unoccupied space in its existing supermarkets, saving £160m a year.

A first-phase review by the CMA will consider comments submitted on the deal over the next two weeks. A final decision on whether a more in-depth inquiry is needed will be made by 25 July. If this is found to be necessary, the delay would threaten Sainsbury's timetable for the transaction to be completed by the end of the summer, says Sky News.

The regulator says it must determine whether the grocer's plans are likely to result in a "substantial lessening of competition within any market or markets in the United Kingdom for goods or services".

While there would be little crossover in Sainsbury's core grocery offering, the CMA could rule that specific markets for certain non-food goods and services are materially affected by the takeover. As it stands, the deal would create a £6bn non-food operation, putting the new business in the same league as John Lewis and Marks & Spencer and moving it into competition with Amazon.

A Sainsbury's spokesperson said: "We are pleased that the CMA review process into Sainsbury's proposed offer to buy Home Retail Group is progressing. The combination of both businesses will create a multi-product, multi-channel proposition with fast delivery networks, benefiting customers by accelerating our strategy to give them what they want, where and when they want it."

Sainsbury's shares were down 0.4 per cent this afternoon in a flat market, to 268.4p. Home Retail shares were up 0.1 per cent to 166.9p, still well below the effective 172p buyout price tag.

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