Sainsbury’s shares slide as ‘tough’ conditions slow growth

Sainsbury's shares took a significant dip after the supermarket reported decelerated sales growth and warned of "tough" cost-of-living pressures. The UK's second-largest retailer saw its stock plummet by nearly four percent in early trading to 346p, despite raising its full-year profit target. Like-for-like sales growth slowed down from 2.3 to 1.2 percent in the three months to September.

Grocery sales growth slowed from 3.5 to 2.2 percent, while general merchandise and clothing sales improved slightly. Sainsbury's chief executive, Simon Roberts, acknowledged that their volume growth has been "a bit subdued" but expressed optimism about their performance given the strength of their achievements in the previous summer.

Following the sale of Argos to Swift Partners for £120 million, Sainsbury's reported a pre-tax loss of £164 million in the first half of the year, although its underlying pre-tax profit improved by five percent to £366 million. Roberts attributed the growth in food sales to the demand for their premium Taste the Difference range, which grew by more than six percent in the second quarter.

Despite reports of plummeting consumer confidence, the upmarket food range is driving growth. Supply and energy costs are expected to push food inflation beyond six percent by July next year, but Sainsbury's has not yet indicated if the war in Iran is impacting their prices. Sainsbury's market share slipped from 15.3 to 15.2 percent in the year to October, leaving it behind market leader Tesco, which holds 27.8 percent.