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Wed 7th Jan 2015 - Sainsbury’s – food deflation likely to continue in 2015
Sainsbury’s – food deflation likely to continue in 2015: Sainsbury’s has reported like-for-like sales dropped 1.7% in the 14 weeks to 3 January 2015. The company has predicted further food deflation in 2015 as it drops prices on 1,000 products. The company also reported that consumers are continuing a trend to shop more often and locally with a 16% increase in its convenience store business in the quarter. Chief executive Mike Coupe said: “Sainsbury’s has provided a great Christmas for our customers. Food price deflation and falling fuel prices have enabled our customers to treat themselves over the festive period. Customers traded up over Christmas as sales of our Taste the Difference range grew by 5% year-on-year. As an example, sales of our Taste the Difference Conegliano Prosecco grew by over 30%. We also sold over 57 million mince pies and over 550,000 turkeys, up 8% year-on-year. Our colleagues continue to provide excellent in-store service, and again did a fantastic job of serving our customers during the busiest time of the year. A record-breaking week before Christmas saw over 29.5 million customer transactions. We continued to help our customers Live Well for Less with the redemption of £124 million worth of Nectar points during the quarter supported by our popular Christmas Double-Up campaign. The trend of more frequent and local shopping continues and we saw growth of over 16% in our convenience business in the quarter. As well as over six million convenience customer transactions in the week before Christmas, we also saw our largest ever day for convenience sales on 24 December, taking over £8 million. For our groceries online business, this Christmas was our biggest to date. In the three days to 23 December, our online team delivered more than 110,000 orders. Our clothing and general merchandise businesses traded strongly over the quarter, in particular our clothing business was up nearly 10% year-on-year. We sold more than twice the number of Christmas jumpers compared to last year and our ‘snowman’ jumper, designed by one of our colleagues, was our best-seller by volume. We opened 25 new convenience stores and refurbished a further seven in the quarter. We also opened four new supermarkets, one extension and one replacement store, and refurbished seven supermarkets. In November, we announced our plans to invest £150 million in the prices of some of our most popular products. This week we are lowering prices on over 700 of these, including reductions in our meat, fish and poultry categories. For example, the regular price of our 260g boneless cod fillets has dropped from £4.00 to £3.30 and the regular price of a Sainsbury’s 1.35kg British whole chicken has fallen from £4.50 to £3.50. This now means we have reduced the prices of over 1,000 products since we made our announcement. The outlook for the remainder of the financial year is set to remain challenging, with food price deflation likely to continue. Our performance in the third quarter showed an improving trend quarter-on-quarter. However, given the uncertainty in the trading environment, food price deflation and the price reductions we announced this week, we currently expect our fourth quarter like-for-like to be similar to that of our first half. Our prices versus our supermarket peers have never been better and alongside our differentiated quality and service offer, we are confident we will help our customers Live Well for Less throughout 2015.”

Majestic Wine – like-for-likes up 1.1% over Christmas amid increased promotional activity: Majestic Wine, the UK’s largest retail wine specialist, has announced that total UK store sales for the ten weeks of Christmas trading from 28 October to 5 January 2015, were up 3.7%. Over the same period like-for-like UK store sales growth was 1.1%. This performance brings the like-for like UK store sales growth to 2.0% for the first 40 weeks of the financial year. The Christmas trading period was particularly challenging characterised by increased levels of competitive promotional activity to attract customers into store and online. Whilst Majestic traded effectively over the period the Company invested 50 basis points of gross margin ensuring pricing remained competitive in this more promotional environment. Steve Lewis, chief executive, said: “Majestic delivered like for like sales growth of 1.1% in a difficult Christmas trading period characterised by promotional activity and we are now focused on delivering our final quarter’s trading. We anticipate this competitive pricing environment will continue throughout much of 2015.”


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