Sainsbury's sales still sliding

BELEAGUERED supermarkets group Sainsbury's has suffered a further slide in sales in the third quarter but chief executive Justin King said trading had shown some improvement over Christmas and the New Year, which he hailed as 'a good first step' towards recovery.

But he would not say the group has turned the corner and warned that the fiercely competitive market is likely to get even tougher in the months ahead, with renewed price-cutting by rivals.

Sales for the four weeks to 1 January were down by 0.4% excluding petrol - in line with most analysts' expectations, but still a fall of 1.2% for the 12-week period.

King, who was head of Marks & Spencer's food operations, took over as Sainsbury's chief executive last March. He inherited huge supply problems from his predecessor, Sir Peter Davis, the result of a bungled £3bn investment programme.

But King said he was 'particularly pleased' with the levels of availability and customer service over the crucial Christmas period.

'We are committed to making continuous improvements to our operations and have put a number of actions in place to ensure progress, particularly around product availability and store labour,' he said.

While product availability has improved, the group suffered another setback last week when some of its London stores were left without fresh foods after a computer glitch.

The company, still 35% owned by the Sainsbury family, has been on bid alert since last November, when it reported the first loss in its 135-year history. It slumped into the red by £39m over the first half after a raft of exceptional costs.

{2} On Tuesday, Wm Morrison warned of slower growth this year as it revealed that like-for-like turnover at its core Morrisons supermarkets chain had slowed to 0.1% in the six weeks to 9 January, well below analysts' expectations.

Chairman Sir Ken Morrison said Britain's fourth-largest food retailer was on course to meet analysts' full-year expectations, but the group is still struggling to turn round the Safeway chain, bought for more than £3bn last year.

The poor performances of Sainsbury's and Morrisons are in sharp contrast to Tesco, which will again demonstrate its dominance when it reports next Tuesday. Analysts are expecting underlying sales growth of as much as 6.5%.

Figures from TNS Superpanel yesterday put Tesco's market share at a record 29% over Christmas and New Year, up from 26.6% a year ago. The 'remarkable rise' of the group shows no sign of running out of steam, said TNS's Edward Garner.

Wal-Mart owned Asda achieved a record share of 17.1%. Sainsbury's slowed its rate of decline but is still down from 16.3% to 15.9%. There was a sharp decline for Morrisons/Safeway, from 14.5% a year ago to 12.4%.

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