Sainsbury’s like-for-like sales fell 1.1% in the 15 weeks to 5 January after general merchandise sales, including Argos, fell 2.3%.
Chief executive Mike Coupe attributed the fall to a decision to row back on Black Friday promotions, causing a particular decline in toy sales. While the headline figure is down, Coupe said the decision meant that sales were more profitable.
"The reality is that Black Friday has got a little carried away with itself over the last few years, so we’ve been pretty cautious with how we’ve approached that," Coupe said on a call to journalists this morning.
He added that the struggles of the retail sector in general, with a slew of companies going into administration or issuing profit warnings, made it difficult to compete on deals: "There are a lot of retailers in distress, so there’s a lot of discounted stock out there."
Sainsbury’s grocery sales in the period were up just 0.4%, behind the market as a whole. Coupe said this was partly the result of customers trading down to lower-priced options; some of Sainsbury’s most successful products included £9 turkey crowns and 30p bags of veg. "There’s undoubtedly been an element of caution in how consumers spend their money," he noted.
The expansion of Aldi and Lidl, which have opened hundreds of new stores in recent years and with more planned, had also had an impact on market share that was difficult to swerve, according to Coupe. He added: "No matter how good a retailer you are, that will have an impact on your business."
Coupe said he was extremely concerned about the impact of a "no deal" exit from the European Union, because that could make it difficult for shipments of food to enter the country, pointing out that it would not be possible to stockpile substantial quantities of food.
"There’s a limit to how much contingency planning you can do," Coupe said. "We have 20 distribution centres – there aren’t 20 other lying around you call fill up with stock. The reality is, it would be hugely disruptive if there was a no-deal Brexit."
On the planned merger with Asda, Coupe said the Competition Appeal Tribunal had agreed to give Sainsbury’s more time to respond to the Competition & Markets Authority investigation and the CMA would now publish its findings in late January or early February.