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Sainsbury reveals solid sales performance boosted by Royal Wedding

Sainsbury (LON:SBRY) sold nearly 300 miles of bunting, 159,000 flags and 49,000 mugs because of April's Royal wedding in April, the firm said today, as it released a Q1 trading statement.

It also revealed it had sold the most champagne ever outside Christmas.

Total sales for the 12 weeks to 11 June this year were up 7.3 percent, with like-for-like sales seeing an increase of 4.8 per cent.

The results were solid and in line with expectations, despite the continued difficult consumer environment, said the company.

"Despite the tough economic conditions our customers celebrated Easter, the Royal wedding and the glorious weather in April, playing to our strength of supporting family occasions," said the retailer, which also added that hot cross bun sales had increased 29 per cent.

But the firm added: "While demonstrating a willingness to treat themselves on these family occasions, our customers continue to manage their spend carefully.

"The increase in fuel costs is placing further pressure on consumer disposable income."

The company said its lower cost own label ranges had seen volume and sales growth in the period.

General merchandise and clothing grew faster than food while the convenience business grew at 20 percent, as did the groceries online business.

Sainsbury also had expanded in line with plans - opening two new supermarkets, one replacement, three extensions and 13 convenience stores, it said.

"The market environment remains very competitive, reflecting the challenging economic backdrop.

"We expect this to be the case throughout the year. Sainsbury's will continue to help our customers to manage their weekly spend and still enjoy great quality products, whilst at the same time investing for future growth in space, non-food and our online business."

Sainsbury shares were up slightly - 1.8 pence - this morning, trading at 328.6 pence.

Broker Shore Capital retained its "hold" rating for the stock - at 327 pence. Analyst Clive Black said Tesco's (LON:TSCO) Q1 update yesterday had revealed the "subdued" nature of the UK consumer.

On Sainsbury he went on: "Sainsbury's update gives us a feel for some of the trading momentum in June albeit the quarter covered is a relatively lumpy one comprising a subdued March and May and what we deem to be a well documented but ultimately 'exceptionally' strong April."

He added that total sales including VAT and fuel increased by 7.3 percent (compared with Tesco’s 7.0 percent), again showing the significant mineral oil inflation that the UK consumer is enduring.

"We see the recent de-rating of the stock as being broadly justified as a result of the termination of Sainsbury's material outperformance in terms of LFL sales and market share against the pack," he said, adding that this was all the more significant in light of Sainsbury's investment programme - it's opening new space at the fastest percentage rate in the market at the moment.

Meanwhile, analyst Matthew McEachran at Singer Capital Markets said the Q1 update had been "solid" and added that as with the other grocers they are adding a lot of space - 0.2msqft in Q1, some of which is going into non-food.