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A record-breaking week before Christmas couldn’t prevent Sainsbury’s (LON:SBRY) posting its first fall in third-quarter sales for more than a decade.
The supermarket chain posted a 1.7% dip in third quarter like-for-like sales for the 14 weeks to January 3rd, despite handling a ‘record’ 29.5 million customer transactions in the seven days before Christmas.
Total sales dropped by 0.4% and chief executive Mike Coupe said the outlook for the remainder of the financial year will remain challenging; meanwhile, the firm looks set to cut its dividend for the year.
The figures were an improvement on the second quarter, however, when like-for-like sales, excluding fuel, fell 2.8%.
"Depending on your viewpoint, this morning’s Sainsbury’s figures either beat market expectations or are ‘less worse’ than expected," said Alastair McCaig at spread betting firm IG Group.
Christmas Eve saw the supermarket enjoy its largest ever day for convenience sales, taking over £8mln.
Sainsbury's is the first of the Big Four supermarkets to announce its results for the festive period; Tesco sends out a statement tomorrow.
The pair, along with Asda and Morrisons, has been fighting a discount battle to keep customers, as cheaper rivals like Aldi and Lidl continue to win business.
In November, Sainsbury's announced plans to invest £150mln in cutting the prices of some of its products.
This week, Coupe said the supermarket will lower prices on over 700 products, including reductions in meat, fish and poultry.
Analysts at Cantor Fizgerald said the interesting debate now is the level and sustainability of on-going price investments and the impact on industry gross margin given industry like-for-like sales are still negative.
"Yesterday, Asda announced another £300mln investment in price rollbacks. We also expect Tesco to announce a similar level of price cuts on Thursday, with a £900mln price investment across 1000’s of lines.
"The risk for Sainsbury's sales is whether their gross price investments are successful in switching customers and are offset by changes in promotional activity."
Shares were 1.6p lower at 233p.