Sainsbury's sales fell in the wake of its collapsed merger with Asda but there were signs of green shoots as chief executive Mike Coupe embarks on a bold strategy to make the grocer cheaper.
Same-store sales fell 1.6% in the quarter to June, but Coupe says price cuts on 1000 everyday food and grocery items will help it gain market share. Its Tu brand has just overtaken Tesco as the UK’s fifth biggest seller of clothes.
Coupe is under pressure to show he remains the right man to lead the business after competition authorities blocked his merger with Asda. The City is wondering how the company will pay for the price cuts and analysts are likely to cut profit forecasts after digesting today’s numbers.
Some investors are concerned by his £3.9 million pay, but a full shareholder rebellion is not expected. “My pay is set by a remuneration committee,” he said. He noted that last year profits and dividends were up while debts fell.
Coupe remains concerned about a hard Brexit and notes that October 31 “not far off the worst day you could choose”. That’s because Sainsbury’s and others will be ramping up for Christmas by then, so there will be no spare warehouse capacity to stockpile goods.
“We are in uncertain, uncharted territory. It could be very disruptive to the food supply chain,” he said.
Sainsbury’s shares, which were 340p last August, were today steady at 200p. The chain says its premium Taste the Difference range is growing market share.
