Sainsbury’s profit in Q1 2016 fell

Sales of British supermarket chain Sainsbury’s in the first quarter fell by less than analysts’ estimates, after the trader has lowered prices on a permanent basis in order to stop the outflow of customers to cheaper competing stores. Excluding fuel, sales at stores fell by 0.8% in the 12 weeks ended June 4, said London-based chain. This is significantly better performance compared with forecasts of 14 analysts, who had expected sales drop of 1.7%. Sales of clothing rose by almost 5%. However, calculations show that for the last ten quarters, sales of Sainsbury’s rose only once – in the last three months of 2015

To cope with the growing popularity of chains Aldi and Lidl, offering cheaper goods, Sainsbury and its main competitors simplified pricing phasing out some promotions in exchange for lower prices of everyday goods such as chicken, eggs and cheese. All supermarket chains in the kingdom suffer because chains offering cheaper goods that continue to win customers and open new stores.

“We made a steady start to the year”, said CEO Sainsbury’s Mike Cope. “Market conditions continue to be challenging as deflation in food prices continues to affect our sales”, he explained.

Supermarket chain announced that customers benefiting from promotions, decreased during the quarter – up 23% compared to 30% a year earlier. Trader intends to discontinue August majority of promotions such as “buy one, get another one free.”

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