UK Supermarket Sainsbury's Reports first rise in Sales in Two Years

Sainsbury's has reported its first rise in sales in two years, as it continued to cut back on multi-buy promotions and lowered prices on everyday items.

The UK's third-largest supermarket reported that sales at stores open more than a year, excluding fuel, rose 0.1% in the three months to 12 March.

That compared with a 0.4% fall in like-for-like sales over Christmas.

Sainsbury's is facing a continued pricing war and challenges from discount chains.

The supermarket's chief executive Mike Coupe said market conditions remained competitive as food deflation continued to have an impact on sales.

In November, the supermarket reported that underlying pre-tax profits for the 28 weeks to 26 September fell 17.9% to £308m.

Sainsbury's said it remained committed to phasing out its multi-buy promotions by August,

The supermarket's better-than-expected sales figures were helped by a rise in online grocery sales, which were up nearly 14% in the period.

It added it maintained its market share in the fourth quarter.

Sainsbury's will report annual results in May.

'No deal at any price'

Sainsbury's chief executive Mike Coupe would not say whether the supermarket would increase its £1.3bn offer for Argos owner Home Retail Group before Friday's takeover panel deadline. 

Both it and South African rival Steinhoff International, have until Friday to make a firm bid or walk away.

However, he reaffirmed that the retailer would not pay over the odds for the Argos owner.

"The Argos bid is not a must-do deal at any price and if it doesn't go ahead, then Sainsbury's will continue," Mr Coupe said. 

Sales growth in the fourth quarter was also bolstered by a strong performance from the clothing and entertainment divisions, he said. 

Clothing sales had recovered after being hit by unseasonable weather in previous quarters, with sales up more than 10%, while hits including Adele's new album and the James Bond film Spectre sent entertainment sales up nearly 11%.

Elsewhere, online grocer Ocado reported a 15.3% rise in gross sales to £312.4m for the three months to 21 February from £271.1m a year earlier.

But Ocado offered no like-for-like sales data. It said average order sizes had fallen 2.9% to £111.41 from £114.72 a year earlier.