UK: Sainsbury’s Holiday Sales Fall

Sainsbury’s Christmas sales fell more than analysts expected as price-conscious UK shoppers turned to discounters for their turkey and stocking stuffers.

The supermarket chain became the second of the big four UK grocers to highlight consumer unease over the holiday season, with Morrison Supermarkets warning earlier this week that the political stalemate over Brexit was making shoppers rein in outlays.

“People have been extremely cautious in how they spend money,” Sainsbury’s CEO Mike Coupe said on a call Wednesday, January 9. “We think this cautiousness will continue at least during this period of uncertainty.”

The shares fell as much as 2.8% in early London trading.

In addition to the challenges of Brexit, Sainsbury’s faces rising competition from discounters Aldi and Lidl and a growing threat from Amazon.com. Walmart’s Asda, which also appeals to budget-conscious consumers, posted the strongest growth among the big four UK grocers, Kantar Worldpanel announced Tuesday. Tesco reports sales on Thursday.

The downbeat report from Sainsbury’s underlines the grocer’s rationale for its planned acquisition of Asda. The UK’s No. 2 supermarket chain lacks the scale of market leader Tesco, giving it less clout in negotiations with suppliers. By adding Asda, it hopes to cut prices in order to compete better in an increasingly cost-focused market.

Coupe said Sainsbury’s remains confident that the deal will be approved. UK antitrust regulators are set to issue provisional findings by early February.

Full Content: Bloomberg

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