Sainsbury's warns of rising inflation as sales fall

Sainsbury's warned of a challenging environment as like-for-like sales declined in the fourth quarter of its financial year, as inflation is on the rise.

In the nine weeks to 11 March, Britain's second-largest supermarket chain, reported a 0.5% year-on-year decline in like-for-like sales, excluding sales at its petrol station. Analysts had expected a figure between a 0.3% increase and a 1% decline, compared with a third quarter rise of 0.1%.

Meanwhile total retail sales, again excluding the impact of fuel sales, were 0.1% higher than in the corresponding period last year.

There was more positive news from Argos, whose integration remained on track after it delivered another quarter of growth.

The catalogue retailer, which was acquired by Sainsbury's for £1.4bn in September last year, saw total sales climb 3.8%, while like-for-like sales climbed 4.3% on the back of good growth in technology categories, with particularly good contributions from mobile phones, video gaming, wearable tech and sports equipment.

Group chief executive Mike Coupe said the FTSE 100-listed company was making good progress against its targets, but warned that the trading environment remained challenging, amid rising inflation.

"The market remains very competitive and the impact of cost price pressures remains uncertain, " he added. However, we are well placed to navigate the external environment and remain focused on delivering our strategy."

Earlier this month, the retailer said it would cut up to 400 jobs following a recent review of its store operations, to ensure efficiency.

As part of the shakeup, Sainsbury's would be cutting night shifts in 140 stores. This, the company said, would affect 4,000 employees, who will be required to move either to early morning or late evening shifts.