Sales fall at Sainsbury's for the second quarter in a row as supermarket price war rages

Sainsbury's has posted a second consecutive quarterly fall in sales, blaming falling food prices amid the intense supermarket price war.

Like-for-like sales excluding fuel, which strip out the impact of new store openings, fell 1.1% in the 16 weeks to 24 September, its second quarter of the year. Total sales fell 0.4%.

This was a little better than City forecasts of a 1.2% fall, but comes on top of a first quarter fall of 0.8%.

Supermarket profits have been squeezed over recent years by the growth of discounters Aldi and Lidl. Britain's "big four" supermarkets – Tesco, Sainsbury's, Asda and Morrisons – are fighting back by cutting prices and boosting services.

Sainsbury's chief executive Mike Coupe said: "We expect the market to remain competitive and the effect of the devaluation of sterling remains unclear."

"However, Sainsbury's is well-positioned to navigate the changing marketplace and we are confident that our strategy will enable us to continue to outperform our major peers."

The supermarket chain said it has focused on cutting prices on its everyday products rather than running promotions. This quarter, it said it had cut the price of its deep pan Margherita pizza by 40p to 90p and a 46-pack of its own-brand nappies by 75p to £2.50.

The supermarket completed its £1.4bn takeover of Argos-owner Home Retail Group, at the beginning of this month.

Sainsbury's, which already has 15 Argos stores within its own shops, said it would open 200 digital collection points in its stores by the end of the year.

The supermarket group said Argos's like-for-like sales in the second quarter to 27 August, before it took over the firm, rose 2.3%.

However, Julie Palmer, partner and retail expert at Begbies Traynor, pointed out that the supermarket chain is lagging behind its rivals. She said: "Yet again, Sainsbury's has failed to turn around its weak sales performance, in stark contrast to the recent momentum seen by two of its largest competitors, Morrisons and Tesco, whose recovery seems to be gathering pace."

"It remains too early to tell what material benefits Sainsbury's will garner from the integration of Argos. However, current sales figures look promising."

"Over the next six months, investors will be keeping a close eye on the supermarket chain to see if the £1.4bn deal can deliver the significant cost savings and diversified shopping experience that Sainsbury's hopes it will."