Apparel sales growth slipped by more than 4% at Sainsbury’s in the first quarter, with the UK supermarket group blaming challenging market conditions and poor weather for impacting demand in some seasonal categories.
Clothing sales declined by 4.5% for the 16 weeks to 29 June, but Sainsbury’s was quick to note it is now the fifth largest clothing retailer by volume in the UK (previously sixth), with share gains helped by strong online growth in its Tu brand online and Tu at Argos.
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Overall general merchandise sales fell by 3.1% in the period, while total retail sales slipped 1.2%, excluding fuel, and like-for-like sales declined by 1.6%, also excluding fuel.
CEO Mike Coupe says the supermarket group continues to adapt its business to changing shopping habits and made good progress in a challenging market.
“In a tough trading environment, we gained market share in key general merchandise categories and in clothing, where we are now the UK’s fifth largest retailer by volume.”
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By GlobalDataThomas Brereton, retail analyst at GlobalData, notes the worse than anticipated 1.6% decline in like-for-like sales, excluding fuel, and the “unhealthy performances” across general merchandise and clothing, seem “dangerously close to nudging Sainsbury’s future prospects from challenging to disastrous.”
He also highlights the distinct lack of a recovery plan being offered at this stage.
“Although the update stated laudable achievements in technology investment (such as 148 supermarkets now offering the SmartShop self-scan process and 206 Argos stores offering Pay@Browse) alongside a brave pledge to invest in 400 supermarkets this year, this offers little assurance that fortunes will improve any time soon.
“Mike Coupe’s position (as well as remuneration) has come under fire in recent months, exacerbated by the share price hitting a 30-year low at the end of June, and such a sidestep of a progress update will only heighten pressure that he should now be facing the music rather than singing along to it.
“Nursing Sainsbury’s back to health is now a difficult and unenviable task to say the least – whoever may be at the helm.”
