Shares in supermarket chain Sainsbury’s fell to a six-year low yesterday as new boss Mike Coupe was forced to slash sales forecasts.
The group yesterday reported a 2.8% reduction in like-for-like sales in the second quarter of the year, pushing revenues 2.1% lower for the first half as a whole.
The company said it now expected the downward sales trend to continue in the second half of the year despite previously having forecast marginal growth for the period.
Mr Coupe, the group’s former group commercial director who took over as chief executive in the summer, said the revision to the growth forecast had come on the back of major change in the UK grocery market as discounters like Aldi and Lidl continue to make progress.
”The market remains dynamic and fiercely competitive,” Mr Coupe said.
“In the second quarter, our performance has been impacted by the accelerated pace of change in the grocery market, including significant pricing activity and food price deflation in many areas. These conditions are likely to persist for the foreseeable future, and we now expect our like-for-like sales in the second half of the year to be similar to the first half.”
Mr Coupe’s assessment that Sainsbury’s was facing a “perfect storm” of trading conditions led analysts at Shore Capital to cut their full-year profits forecasts.
The business is currently being reviewed by the new management team and a strategic update is expected next month.
However, finance director John Rogers yesterday declined to give any reassurance on whether shareholders would see a cut in the dividend as a result.
He said: “We are not making any changes to our dividend policy today. We are in the midst of a strategic review where we’ll be looking at all aspects of our business, and we do review our dividend on a continuous basis.”
Sainsbury’s has already cut food prices in its stores in a bid to see off competition, and this week moved to reduce the cost of petrol.
Shares fell 7% or 17.5p to 234p.