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Are there potential dark clouds ahead for the new CEO of Sainsbury’s?

by on March 17, 2014 in featured item, Lead story, Nuggets, Retail, Retail News

Discounters to finally break Sainsbury’s three-year run of sales growth?

Danielle Pinnington, MD at Shoppercentric comments .. “This is a crucial time for Sainsbury’s so not the ideal time to lose Justin King. With increasing pressure from the Discounters in terms of value, and from the premium retailers in terms of quality and service, Sainsbury’s need a clear vision to maintain their share of the squeezed middle. Let’s hope that vision isn’t about to leave the building”.

The retail world will be turned on its head this week as the discounters finally break Sainsbury’s three-year run of sales growth while annual profits at Next will overtake Marks & Spencer’s for the first time. The stark impact of the low-cost chains on established grocery and fashion players will be laid bare in fresh trading updates.

Sainsbury’s has been the last of the Big Four supermarkets to feel the full force of the discounters, having been insulated by its range of own-brand products and its successful Live Well For Less promotion.

But analysts are predicting a fall of 3 per cent in underlying sales compared to this time last year when it was up 3.6 per cent due to the timing of Mother’s Day and its sponsorship of Comic Relief pulling in more shoppers. This will also be well down on the 0.2 per cent growth seen in Sainsbury’s Christmas update.

The sharp reversal of fortune will be a personal disappointment for chief executive Justin King, who will hand over his crown to commercial director Mike Coupe in July and wanted to leave on a high.

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Sainsbury’s is expected to break its three-year record of consistent underlying sales growth when it publishes figures tomorrow, as it battles against discount chains and comes up against tough comparatives from a year earlier.

Analysts are forecasting a decline of around 3% in like-for-like sales in a sharp reversal of recent fortunes.

The drop would bring to a close its lengthy run of sales growth, having seen underlying sales rise for 36 quarters in a row, and marks a downbeat end to the year’s trading for outgoing boss Justin King.

He will step down after 10 years at the annual meeting in July, and will hand over to commercial director Mike Coupe.

Retailers continue to take the limelight this week, with supermarket Sainsbury’s, fashion chain Next and online player ASOS lining up to report figures.

 

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