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Sainsbury's Warns Market 'remains Challenging' - Sales Decline Again

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http://www.bbc.co.uk/news/business-31918765

Sainsbury's has warned it expects the market to "remain challenging for the foreseeable future" after reporting a drop in like-for-like sales in the fourth quarter.

The supermarket chain said sales at stores open at least a year fell 1.9% excluding fuel in the 10 weeks to 14 March, its fifth quarter of decline.

Total sales fell 0.3%.

"The trading environment remains challenging," said Sainsbury's chief executive Mike Coupe.

Mr Coupe said the drop in sales reflected decisions the group had taken to "improve our competitiveness".

At the start of the year, Sainsbury's said it would cut the prices of 1,000 of its most popular products as part of a £150m programme announced in November.

Too many supermarket stores all cannibalising the same sales?

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When it comes to personal finances, it's a zero sum game. Higher fixed costs = lower non-fixed costs, including food purchases. Middle-market chainstores, independent shops, restaurants, pubs - in fact, a large chunk of the economy....are victims of higher fixed costs. The retail sector is in a chronic decline and it amazes me that retail/other business sectors aren't lobbying the government to help fixed costs be reduced to help the wider economy. Government house price props are the enemy of Tesco as much as the renter who wants reasonable house prices.

These 250K migrants a year don't seem to be embracing the middle class dream of a weekly shop at Sainsburys.

Then....immigration. 250K+ a year - without this our GDP would be...let's just say quite a bit lower. We're importing aggregate demand for things, while demand-per-capita is falling. As you say John - immigrants are not big spenders, so effectively "useless" to large areas of the economy in terms of target market, but very very useful in terms of keeping wages low. Low wages + high fixed costs = chronic stagnation / losses in huge areas of the retail sector. Again, the retail sector just seem to be saying and doing nothing, but burning money everyday. No activism for change....or it's being suppressed?

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Guest eight

Morrisons

Sainsbury's

Tesco

LIDL

ALDI

Waitrose

CO-OP

ASDA

Iceland

This wide choice is great for the British consumer. I do wish they'd stop moaning.

You missed out bit part players such as Farmfoods and Heron. Food practically free in those places.

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If you look at the sectors, you can see which are taking in the money - it is the home builders+-

Along with the bankers, the builders are the businesses closest to the source of printed money.

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Interesting that they split the competitive price pressure and general price falls. Not really where a business wants to be that sector is incredibly competitive. Some of the J Sainsbury share price metrics are flagging deflation.

I have not looked at their recent cashflow statements as year after year of falling like for sales with debt could cause major headaches. Some of the analyst comments suggest they'll need to smash up excess capacity to maintain their profitability.

I don't see a strategy just hands up lets try and ride this out. The last CEO timed his exit well :)

http://www.j-sainsbury.co.uk/media/2430671/q4_trading_statement_final.pdf

This is not advice.

Edited by Ash4781

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ANECDOTAL ALERT*******************

I supply the retailers including JS. They are all 'reshaping' their businesses (throwing senior & expensive 'talent' overboard). Tesco relocating is a prime example. There will be a lot of previously very expensive retail execs looking for work in a severely contracting market.

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maybe this is where it goes full circle

those expensive retail execs setting up their own small, specialist chains that are so good that they poach customers from the supermarkets back to the 'high street'

unlikely I know, but stranger things have happened

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Yeah i agree with an earlier post. Tesco and the likes would benefit massively from a drop in house prices and other fixed costs, which would free up income for more food and consumer shopping. I just do not understand why these big players are not lobbying the government for this to happen.

Plus it is clear that their business model is based on a monopoly and collusion between the supermarkets for price fixing. The likes of Aldi have broken that and it is forcing the traditional UK supermarkets to lower their prices.

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Deflation longer term seems certain.The new Morrisons chairman has already said they are stopping rolling out new local stores and slashing the dividend.Their free cash flow is still strong so its obvious he intends to pay down the debt with the cashflow.They own most of their stores so it seems they are preparing to get to low/zero debt,low dividends and no rent payments.

That can only be bad news for Tesco and Sainsbury who have much higher lease payments,lower free cash flow and pensions deficits.They need lower house prices.

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maybe this is where it goes full circle

those expensive retail execs setting up their own small, specialist chains that are so good that they poach customers from the supermarkets back to the 'high street'

unlikely I know, but stranger things have happened

All good, see them work hard for a living....the greater the competition the better for the consumer. ;)

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Sainsburys (et al) land banks suggests that their interests are rather confused. These days their shops could easily be a sideline just making their land look pretty.

At least the likes of Aldi and Lidl etc with much smaller stores aren't so confused.

Sainsburys et al should sell up and put their land to housing. Even their mobile phone offerings are dire. Leave a bit for their car hand washers.

Leave shops to Aldi and Lidl etc.

Edited by billybong

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Sainsburys (et al) land banks suggests that their interests are rather confused. These days their shops could easily be a sideline just making their land look pretty.

At least the likes of Aldi and Lidl etc with much smaller stores aren't so confused.

Sainsburys et al should sell up and put their land to housing. Even their mobile phone offerings are dire. Leave a bit for their car hand washers.

Leave shops to Aldi and Lidl etc.

have you noticed every new aldi or lidl built has flats above it ?

rent out the flats and they get a free store or sell the flats and still get a free store ;)

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Sainsburys came out and upgraded their profit forecast today. Seemed to pull the sector share prices up. A bit odd coming off previous guidance. Not looked at the detailed numbers.

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have you noticed every new aldi or lidl built has flats above it ?

rent out the flats and they get a free store or sell the flats and still get a free store ;)

none of the 4 nearest Aldis to me have flats above and the two that I frequent in Spain don't either

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have you noticed every new aldi or lidl built has flats above it ?

rent out the flats and they get a free store or sell the flats and still get a free store ;)

???

I think I've only seen one with flats above it and that was in London somewhere. The new builds I've seen are either from scratch or converting an existing building (like a unit in a retail park).

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I used to work in Sainsbury's and I can say that I'm surprised this hasn't happened sooner. Far too expensive and average quality. I remember a time when they didn't even offer a basic range, and to this day I still don't think they actually understand what customers really want.

As said in the previous page: Lower the prices.

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