Sainsbury’s sees no let-up in tough market conditions

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LONDON: Sainsbury's, Britain's second biggest supermarket, on Wednesday reported a drop in quarterly underlying sales and cautioned that it did not expect market conditions to improve any time soon.

The firm, which in April agreed a 1.4 billion pounds ($2.04 billion) takeover of Argos-owner Home Retail, said sales at stores open over a year fell 0.8 percent, excluding fuel, in the 12 weeks to June 4, its fiscal first quarter.

That was slightly better than analysts´ average forecast of down 1.4 percent but represented a step back from a rise of 0.1 percent in the fourth quarter of the supermarket´s last financial year, its first quarter of growth in over two years.

"Market conditions remain challenging. Food price deflation continues to impact our sales and pressures on pricing mean the market will remain competitive for the foreseeable future," said Chief Executive Mike Coupe.

He added that he still expected Sainsbury´s to outperform its major peers.

Sainsbury's has shown greater resilience to competition from German discounters Aldi and Lidl than its traditional rivals - market leader Tesco, Asda and Morrisons.