Sainsbury's Shares Drop After Supermarket Unveils More Price Cuts

Sainsbury's shares dipped after the supermarket said it would slash prices, a bid to turn around a sudden fall in sales.

The firm's share price fell by more than 2% in early trading following the announcement. Some investors are wary of how much investment will go in to cutting prices and discounting to bring Sainsbury's sales to growth again.

"We will continue to run as many promotions as before and they will be just as competitive, but customers now have the added reassurance that prices will always be great value at Sainsbury's, both on and off promotion," said Sainsbury's marketing director Sarah Warby.

Sainsbury's also announced that struggling Tesco, the UK's biggest supermarket, will no longer be included in its "Brands Match" price-comparison scheme for customers.

Instead, Sainsbury's will only compare its prices against Asda, offering a coupon for the difference if a customer's basket of groceries would have been cheaper at the latter.

The supermarket saw two consecutive quarters of falling sales at the end of the 2013/14 year and the start of 2014/15. When sales fell by 1.5% in the final quarter of 2013/14, it was the first drop in nine years. They dropped by a further 1% in the following quarter.