Sainsbury confirms difficult market conditions
Today's trading statement from Sainsbury chief executive Justin King is pretty much in line with analyst expectations with like for like sales up 1.1% in the first quarter of the new fiscal year. However, like Tesco earlier in the week, Sainsbury has highlighted the fact that food price inflation is more subdued than in 2009 which could see a potential slowdown in growth in the short to medium term.
Interestingly Justin King also commented upon the UK economy as a whole with the opinion of Sainsbury that there are still difficult times ahead and the environment is "challenging". When you also consider the fact that the UK government is on the verge of introducing substantial public sector investment cuts, as well as potentially higher taxes, there's a feeling that consumers will be hit in their pockets over the coming months. This will almost certainly filter through into the supermarket sector, an integral part of everyday life in the UK, and impact upon growth in the immediate future.
However, on a more positive note it was interesting to see that Sainsbury is still grabbing market share in the UK and has narrowed the gap between Asda which is one place above Sainsbury at number two in the pecking order.
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