For the second consecutive quarter J Sainsbury (LSE: SBRY) (NASDAQOTH: JSAIY.US) has revealed a fall in sales. The food retail environment continues to be challenging and like-for-like sales declined by 1.1% — near the midpoint of analyst expectations.
Big shoes to fill
Today’s trading update will be the last for Justin King who exits the company after 10 years in charge. He will be succeeded by Mike Coupe, the group’s commercial director, who takes over as industry growth is at the lowest point in a decade.
But, industry headwinds aside, Mr Coupe is being dealt a strong hand.
Sales from convenience stores and online have nearly doubled in the last five years to 15% of total sales. In the most recent quarter Sainsbury’s opened 27 new convenience stores, and the firm remains on track to open two new convenience stores per week this year.
Online grocery sales grew by 10% year-on-year, supported by an improved website, while a trial of a new online clothing offer, if successful, could increase the reach of the clothing business to customers countrywide. General merchandise and clothing delivered double-digit growth in the three months to 7 June.
Share performance
Sainsbury’s shares increased by 7p to 337p during early trade this morning. The shares lag the leading FTSE 100 index by 6 percentage points in 2014.
Justin King, the chief executive, warned that customer spending is set to remain cautious, but that “our clear strategy and differentiated offer will allow us to outperform our supermarket peers throughout the remainder of the year.”