A little Christmas cheer for Sainsbury
again reported a mixed set of quarterly results, with the Christmas
period boosting revenues towards the end of the third quarter and
offsetting another poor performance caused by the overhaul of the
company's store portfolio.
Like-for-like sales at Sainsbury's Supermarkets in the UK were up 2.0 per cent in the four-week Christmas period (to 3 January), helping to push up total sales for the quarter by 1.8 per cent.
But Sainsbury's low overall like-for-like growth rate continued, with sales for the quarter ahead just 0.1 per cent compared to 2002. This comes in stark contrast to Morrisons, whose Christmas like-for-like sales (admittedly calculated over six rather than four weeks) were a massive 10.2 per cent higher than in 2002.
Even Iceland, itself in the throws of a major store refit programme, posted better results, with like-for-like sales ahead 1.2 per cent for the quarter and 1.9 per cent for the Christmas period.
The real test will come after the summer, when Sainsbury's restructuring plan should be completed and when the company will no longer be able to blame the upheaval this has caused for its ongoing poor performance.
In his now traditional statement justifying the low growth rates, Peter Davis, group chief executive, said that the scale and pace of change of the UK business was at its peak, with systems changes, new automated distribution centres and the introduction of non-food ranges all being implemented simultaneously.
"The sheer volume of change is affecting our stores' performance," he said, grasping desperately at the like-for-like sales growth of 2.0 per cent over the Christmas and New Year period as his only real source of comfort - "an encouraging improvement in sales performance and a sound base on which to build during our next financial year," he said.
Davis suggests that this figure reveals more about the likely state of Sainsbury's business once the refit programme is completed, since it came during a month when the restructuring took a back seat and the company focused all its efforts on trading. But like-for-like growth of 2 per cent is still at the low end of the scale, and not enough to help Sainsbury close the gap on Tesco and Asda, or even necessarily stay ahead of Morrisons/Safeway, so there is still plenty more to be done.
The oft-criticised Sainsbury management team does at least have one feather in its cap - the good performance from the Shaw's chain in the US, which showed good sales momentum and a significant improvement over the first half of the year, admittedly boosted by new store openings and the important Thanksgiving period. Total sales for the quarter were up 6.6 per cent, while like-for-like sales were ahead 1.5 per cent.
"We must continue to be realistic about the level of change being undertaken in Sainsbury's Supermarkets and the major changes taking place in the UK grocery retail sector," Davis said. "Our Christmas sales performance was an encouraging indication for the future but it is still our priority to complete our Business Transformation Programme and thereby realise lower costs and an improved infrastructure."By summer 2004 we will focus fully on trading our business. We are developing our customer proposition by investing in quality and innovation and further improving our competitive offer."
All of which means that analysts and investors, to say nothing of customers, will expect to see big changes this time next year.