April 30, 2019 / 7:56 AM / 4 months ago

UPDATE 2-Sainsbury's poor trading heightens grief over Asda deal

    * Sainsbury's sales down 1.2 pct in latest 12 weeks - Kantar
    * Sainsbury's takeover of Asda was blocked last week
    * Sainsbury's publishes full year results on Wednesday
    * Shares down 29 pct over last six months

 (Adds detail, table, shares)
    By James Davey
    LONDON, April 30 (Reuters) - Sainsbury's, reeling
from last week's decision by the regulator to block its takeover
of rival Asda, was alone among Britain's big four supermarket
groups in seeing sales fall in the latest 12-week period,
industry data showed on Tuesday.
    Sainsbury's wanted to buy Walmart owned Asda to
boost its scale and buying power, as well as to compete better
with market leader Tesco and fast growing German-owned
discounters Aldi and Lidl.
    However, last Thursday the Competition and Markets Authority
(CMA) thwarted the 7.3 billion pound ($9.5 billion) deal, saying
it would have seen prices rise, not fall, as Sainsbury's and
Asda had argued.
    Sainsbury's is due to publish full year results on Wednesday
with Chief Executive Mike Coupe under pressure to reassure
investors he has the plan to arrest the sales decline.

    Despite the deal's failure Coupe's job is not under
immediate threat.
    "The chairman (Martin Scicluna) and the board are fully
behind Mike," said a Sainsbury's spokeswoman.
    Sainsbury's shares were down 0.5 percent at 0853 GMT,
extending losses over the last six months to 29 percent.
    Market researcher Kantar said Sainsbury's sales fell 1.2
percent in the 12 weeks to April 21 compared to the same period
a year ago.
    In contrast sales at Tesco, Asda and No. 4 Morrisons
increased 1.0 percent, 0.3 percent and 0.6 percent respectively.
    Kantar said all of the big four lost market share to German
owned discounters Aldi and Lidl, whose sales rose 11.6 percent
and 8.6 percent respectively, giving them a combined share of
13.6 percent.    
    Sainsbury's did, however, reclaim its position as Britain's
No. 2 supermarket group by market share - a status it lost to
Asda for the first time in four years in Kantar's last data
    Sainsbury argues that Kantar under-reads its general
merchandise market share. This is because since acquiring Argos
in 2016 Sainsbury has streamlined general merchandise ranges in
its stores in favour of Argos ranges. However, Argos' sales are
not captured by Kantar.
    Kantar did highlight one bright spot for Sainsbury's in the
data - double-digit growth online which coincides with the
launch of its first mobile-only payment store in central London
this week, demonstrating its drive towards digital innovation.
    The market researcher said total UK grocery sales rose 2
percent over the 12 week period, the fastest rate of growth the
overall sector has experienced this year. It was boosted by warm
weather over the Easter holiday period.
    Grocery inflation was 1.4 percent over the period, Kantar
said. Prices were rising fastest in markets such as cola, lamb
and crisps, while falling in instant coffee, fresh sausages and
    Market share and sales growth (percent)
                  12 wks to     12 wks to     pct change
                  April 21      April 22      in sales
                  2019          2018          
 Tesco            27.3          27.6          1.0
 Sainsbury's      15.4          15.9          -1.2
 Asda             15.2          15.5          0.3
 Morrisons        10.3          10.5          0.6
 Aldi             7.9           7.3           11.6
 Co-operative     6.1           6.0           4.5
 Lidl             5.7           5.4           8.6
 Waitrose         5.0           5.1           0.7
 Iceland          2.1           2.1           1.4
 Ocado            1.3           1.2           6.8
 Source: Kantar Worldpanel
  ($1 = 0.7710 pounds)

 (Reporting by James Davey; editing by Kate Holton and Jon
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