J Sainsbury Plc’s surprise increase in fourth-quarter sales means all of Britain’s big listed supermarkets are back in growth.
For the first time since 2011, same-store revenue is rising at Sainsbury, market leader Tesco Plc and Wm Morrison Supermarkets Plc. Of the four main grocery chains, only Wal-Mart Stores Inc.’s Asda chain remains in decline.
"The market is fairly brutal, so it is a massive thumbs up," Bryan Roberts, an analyst at TCC Global, said of Sainsbury’s 0.1 per cent increase in fourth-quarter same-store sales. That compared with analyst estimates for a 0.3 per cent drop, excluding gasoline.
Sainsbury’s return to growth is the latest sign that the UK’s largest grocers are getting back on their feet amid a price war sparked by the surge in popularity of discounters Aldi and Lidl. Tesco and Morrison are fighting back under new leadership, leaving Asda as the industry’s main loser as its sales go from bad to worse.
Sainsbury shares eased 0.6 per cent to 278.9 pence in early London trading, mirroring a broader market decline across Europe.
Sainsbury expects the grocery market to remain competitive, according to Chief Executive Officer Mike Coupe, who is pursuing a £1.3 billion ($1.9 billion) acquisition of Home Retail Group Plc, the owner of Argos non-food stores. The CEO must this week decide whether to boost his proposal after Steinhoff International Holdings NV topped it with an all-cash offer. Buying Home Retail isn’t a deal that has to be done "at any price," Coupe said Tuesday on a conference call.
"The Argos deal is not make or break for Sainsbury’s," Roberts said. "It has an incredibly strong core business."
News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.
