Sainsbury shares rise; first-quarter sales not as bad as expected

10th Jun 2015 07:05

Shares in UK supermarket retailer Sainsbury rose 1.7% after its first-quarter sales came in a little better than expected.The company reported its sixth straight quarter of falling underlying sales on the back of food price deflation and increased competition. However, the 2.1% fall in like-for-like sales for the 12 weeks to 6 June, excluding fuel, was a little better than analysts' expectations for a 2.3% decline.Sales fell 1.9% in the previous quarter.Chief executive Mike Coupe said: ""Trading conditions are still being impacted by strong levels of food deflation and a highly competitive pricing backdrop. These pressures, including the effect of our own targeted price investment, have led to a fall in like-for-like sales for the quarter.""We outlined in our Strategic Review in November some of the key actions we would be taking to remain competitive in this environment and are encouraged by some of the early trends that we are seeing in our key trading and operational metrics," he added.Commenting on the results, Societe Generale said: "In a still challenging environment (stiff price competition and strong deflation), we think Sainsbury's will prove to have a more resilient profile than many fear thanks to its strong differentiation and efficient marketing policy."Meanwhile, Brewin Dolphin said that while the sales performance was worse than in the second half of last year, it was ahead of consensus. "Even at these levels, Sainsbury's profitability will be significantly better than its listed peers. The announcement by Morrison's that it will cut prices further is a marginal negative, but we continue to believe that Sainsbury is the best placed amongst the three listed supermarkets," added Brewin.