Sainsbury’s – another solid performance

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This is another solid trading update from Sainsbury’s with further volume growth in the second quarter and an improved market share performance. This means the group now expects profit for the year to come in at the top end of its previous guidance range.

Sainsbury’s has worked hard to lower prices in the face of intense competition. The launch of Nectar prices, where Nectar card holders save money on everyday items seems to have been well received and has helped the group to hold its own against Tesco and the German discounters.

Food inflation is starting to fall and this should help ease pressure on consumers, whose finances have been squeezed from all angles by rising prices, no more so than for the weekly shop. That said, lower inflation also means volume growth will become a more important contributor to like-for-like sales in future periods. It is encouraging that Sainsbury’s volumes grew in the second quarter but it will need to maintain this momentum.

Sainsbury’s cannot afford to rest on its laurels. The supermarket sector remains intensely competitive and the UK consumer is far from being out of the woods. But the group is holding its own and will go into the important Christmas period with a measure of confidence.