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Sainsbury’s sales slip but full-year profits to beat expectations

J Sainsbury (LON:SBRY) today released ts second quarter trading statement for the 16 weeks to 26 September 2015. When fuel was included, total sales were down by 1.8% and like-for-likes down by 3.3%.

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However, that would be down from the £681m profit delivered for the year to 14 March.

Chief executive Mike Coupe said Sainsbury’s was making good progress, despite food deflation impacting many categories and the market still being challenging.

Bernstein analyst Bruno Monteyne said this was a change of tone from Sainsbury’s.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: ‘The moderate upgrade of full year profit expectations have given the shares a significant boost in early trade, although the size of the task ahead remains evident.

The supermarket, once famed for its Jamie Oliver ads, is pursuing a more lowkey marketing plan that’s underpinned by a mid-to-low pricing strategy created to curb its reliance on promotions and take it closer to the discounters that have rapidly risen to establish retail’s status quo.

But the decline was better than the 2.1 per cent fall seen in the previous three months and Sainsbury’s said it saw the number of sales and transactions rise, while it added that lower average basket spend in supermarkets continued to stabilise.

“It is clear that Sainsbury’s is now withstanding Tesco effectively, albeit we make this comment within the context of Tesco United Kingdom not being anywhere near as active as we felt it may have been in the development and advancement of its offer under new management.’ Black placed his ‘sell” recommendation under review following the news.

Sainsbury’s, in common with its major rivals, is battling to stem the flow of shoppers to the discounters through price cuts and improvements to product quality and service, financed by cost savings and dividend reductions.

“Our programme to enhance the quality of over 3,000 own-brand products is on track”.

Despite mixed views on this quarter, Sainsbury’s has nonetheless shown pride in its staff. “To recognise the hard work, talent and dedication of our store colleagues, we announced a 4% pay increase from 30th August, which is the highest annual pay increase for store colleagues in over a decade”, said Coupe.

In the United Kingdom, the Office for National Statistics confirmed that the British economy grew 0.7% in the second quarter, in line with analyst expectations.

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Mr Barnes said: “The past 25 years has been an incredible journey for Aldi in the UK”.

Sainsbury's posts sales fall again but raises full year profit outlook as it