Sainsbury eclipses Tesco with rising sales growth

Reuters
Sainsbury's supermarket trailers are seen parked at the new Sainsbury's distribution centre at Thameside in east London
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Sainsbury's supermarket trailers are seen parked at the new Sainsbury's distribution centre at Thameside in east London June 25, 2013. REUTERS/Luke MacGregor

LONDON (Reuters) - J Sainsbury, Britain's third-biggest grocer, met forecasts with a pick-up in quarterly sales driven by growth at local convenience stores and online, outperforming rivals including market leader Tesco.

The group, which trails Tesco and No. 2 player Wal-Mart's Asda by annual revenue, said on Wednesday sales at stores open over a year rose 2.0 percent, excluding fuel, in the 16 weeks to September 28, its fiscal second quarter.

The outcome, a 35th consecutive quarter of underlying sales growth, compares with analysts' forecasts of a rise of 1.5-2.8 percent and first quarter growth of 0.8 percent.

Sainsbury's performance was ahead of flat second quarter UK like-for-like sales at Tesco.

Online and smaller local convenience stores are the two fastest growing areas in the grocery sector as shopping habits change. Consumers are increasingly using the internet to shop and high fuel prices are discouraging trips to town centres and out-of-town malls.

Sainsbury's online grocery sales rose by over 15 percent in its second quarter, while convenience store sales increased 20 percent as customers topped up more often during the warm summer weather, the firm said.

Total sales for the second quarter rose 4.6 percent excluding fuel.

Sainsbury's whose current grocery market share is at a near decade high of 16.6 percent, just behind Asda, has also benefited from the success of its "Brand Match" pricing initiative, growth of own-brand sales and a big push into non-food areas such as kitchen electricals and cookware.

According to market researcher Kantar Worldpanel, Sainsbury was the only one of Britain's "big four" grocers, which also includes No. 4 Morrisons, to increase its market share over the last year.

Sainsbury's Chief Executive Justin King said the firm was "ideally placed to perform well coming into the key Christmas period".

Shares in Sainsbury's, up 13 percent over the last year, closed Tuesday at 390.2 pence, valuing the business at around 7.4 billion pounds.

(Reporting by Neil Maidment; Editing by Kate Holton and Lorraine Turner)

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