Sainsbury’s share price trades higher even as grocer’s Q3 sales fall

Shares in J Sainsbury (LON:SBRY) have climbed higher in London this morning, even as the blue-chip grocer posted a drop in overall sales for the third quarter of its financial year. The results follow those of blue-chip peer Morrisons (LON:MRW), with Tesco (LON:TSCO) to follow tomorrow.

As of 10:52 GMT, Sainsbury’s share price had added 1.50 percent to 270.30p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.93 percent higher at 6,925.53 points. The group’s shares have added just under nine percent to their value over the past year, as compared with about a 10.5-percent drop in the Footsie.

Sainsbury’s Q3 sales drop

Sainsbury’s announced in a statement this morning that its total retail sales excluding fuel had dropped 0.4 percent for the 15 weeks to January 5, with like-for-like sales falling 1.1 percent. The group’s performance was dragged down by a 2.3-percent drop in the company’s general merchandise sales, and a 0.2-percent fall in clothing. Grocery sales, however, inched 0.4 percent higher during the reported period.

“Retail markets are highly competitive and very promotional and the consumer outlook continues to be uncertain. However, we are well placed to navigate the external environment and remain focused on delivering our strategy,” Sainsbury’s chief executive Mike Coupe commented in the statement.

Analysts weigh in on update

Proactive Investors quoted Neil Wilson, chief market analyst at Markets.com, as commenting that Sainsbury’s numbers for the third quarter were ‘truly woeful’. 

“Competition is fierce, but it’s not just discounters like Aldi and Lidl parking their tanks on Sainsbury’s lawn,” he pointed out. “Sainsbury’s did well when Tesco was facing problems and Morrisons was a long way short of where it is now. Both of those have undergone impressive turnarounds – the question is whether Sainsbury’s faces up to the fact that in core grocery at least it too needs to turn the ship around.”

As of 10:52 GMT, Wednesday, 09 January, J Sainsbury plc share price is 270.30p.