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Sainsbury's warns market remains tough as quarterly sales slide again

Last updated: 17:41 17 Mar 2015 AEDT, First published: 18:41 17 Mar 2015 AEDT

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Sainsburys (LON:SBRY) posted its fifth straight quarterly sales decline as price competition from supermarket rivals led to record food deflation.

The UK grocer, one of the so-called ‘Big Four’ supermarkets, said underlying sales fell 1.9%, excluding fuel, in the 10 weeks to 14 March, its fourth quarter. The company had guided to a 2% decline.

In the previous three months sales had fallen by 1.7%.

"The trading environment remains challenging," said J Sainsbury's chief executive Mike Coupe, who took over from long-serving boss Justin King last year.

Total sales fell 0.3% and Coupe added that food deflation is likely to persist for the rest of this calendar year, and competitive pressures on price will continue.

Like its rivals, Tesco and Wm Morrison, Sainsburys is facing challenges from discounters Aldi and Lidl, and at the higher end of the market, from Waitrose and Marks & Spencer.

There were some bright spots in today’s update.

During the quarter, general merchandise and clothing businesses performed strongly, with sales up more than 6% on last year.

Growth in its convenience business was 14% and in the quarter the firm opened 23 convenience stores.

Online grocery orders increased by 14% with one week hitting a record 245,000 orders.

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