RUPERT STEINER
2 October 2014
THE DAILY MAIL
Sainsbury’s has launched a strategic review which could see Britain’s third-largest grocer cut its dividend as it becomes the latest big chain to announce a disappointing trading update.
The supermarket giant cut its annual sales forecast and also said the review would leave ‘no stone unturned’.
It will cover all areas including tapping the market for funds, but the firm said a rights issue was not currently on the cards.
Checking out: Sainsbury’s has launched a strategic review which could see Britain’s third-largest grocer cut its dividend as it becomes the latest big chain to announce a disappointing trading update
Checking out: Sainsbury’s has launched a strategic review which could see Britain’s third-largest grocer cut its dividend as it becomes the latest big chain to announce a disappointing trading update
New chief executive Mike Coupe said the rate of change sweeping through the industry is the most dramatic he has seen in 30 years.
Shoppers have changed the way they do their food shopping, switching to the discounters and smaller convenience stores as well as online.
This has hurt established players with both Morrisons and Tesco having issued a raft of recent profits warnings.
In an apparent dig at Tesco, which inflated its profit by £250million in an accounting scandal, Coupe said he was ‘100 per cent confident’ with the integrity of Sainsbury’s accounts, adding trust was key.
Yesterday the Financial Conduct Authority, the City regulator launched a full investigation into Tesco’s financial irregularities.
Sainsbury’s said that as Britons come out of the recession more are choosing to go to restaurants rather than eat at home and this was one of the factors behind underlying second quarter trading falling 2.8 per cent.
Coupe said the performance has been affected by the fast-moving changes such as the price war and food price deflation.
‘These conditions are likely to persist for the foreseeable future and we now expect our underlying sales in the second half of the year to be similar to the first half,’ he said.
First-half sales fell 2.1 per cent. Sainsbury’s had previously been forecast to post a small increase for the year as a whole.
Trouble at the checkouts: In an apparent dig at Tesco, which inflated its profit by £250million in an accounting scandal, chief executive Mike Coupe said he was ‘100 per cent confident’ with the integrity of
Trouble at the checkouts: In an apparent dig at Tesco, which inflated its profit by £250million in an accounting scandal, chief executive Mike Coupe said he was ‘100 per cent confident’ with the integrity of Sainsbury’s accounts, adding trust was key
The bad news sent the shares down 7 per cent or 17.5p to 234p in a week that has seen all the quoted grocers suffer.
Tesco fell 6p to 180.2p yesterday and Morrisons was down 4.99 per cent or 8.40p to 159.90p.
Daniel Sugarman, a market strategist at spread better ETX Capital, said: ‘This means that three of the UK’s “Big Four†supermarket chains are currently trading significantly lower.
‘With low-cost retailers such as Aldi and Lidl continuing to make gains at the expense of larger firms, 2014 is beginning to look like an ‘annus horribilis’ for the UK’s biggest supermarket chains.’
Coupe said he did not think predecessor Justin King had left the business at the high point.
‘Justin and I worked closely for ten years and the transition has taken place over a long time,’ he said. ‘I don’t think any commentators would have predicted some of the things that have happened in the market place but what’s different is it has substantially accelerated in the recent past.’
Up until the fourth quarter Sainsbury’s had been outperforming rivals, reporting nine unbroken years of sales growth.
It has since posted three straight quarters of falling sales.
Sainsbury’s said latest Kantar market research data covering the past four weeks that showed a ‘material and linear decline in sales’ were wrong.
Coupe said that the strongest growth drivers of the business are its Tu clothing range, banking, convenience and online.
Bizarrely the grocer sold 1,200 boxes of mince pies in the last week of August.
It says that is on course to open five Netto discount stores by the end of the year.
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