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Sainsbury's pledges to cut spending in 'tough market'

Sainsbury's has said it will reduce spending on new stores and look into more cost-saving methods to help finance price cuts in an effort to cope with the toughest market conditions for decades.

Sainsbury's posted a profit before tax and one off items of £375 million for the six months to 27th Sept. This figure is ahead of analysts' expectations of about £350 million, but down from £400 million in the same period last year.

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King: 'Very challenging times for the grocery industry'

These are "very challenging times for the grocery industry" but Sainsbury's is doing well against its immediate competitors, according to the supermarket's outgoing chief executive.

Justin King told Good Morning Britain Sainsbury's was still "growing a lot stronger than our grocery competition" and the whole industry was dealing with low growth.

King: Supermarket customers 'spending cautiously'

Outgoing Sainsbury's chief executive Justin King says customers are "spending cautiously" as the supermarket chain posted a fall in sales in his final quarter before departing.

Throughout the quarter we have continued to invest in reducing prices and improving quality, increasing the value of our offer. Lower food price inflation and reduced fuel prices are a welcome respite to customers’ finances but they continue to spend cautiously, leading to industry growth in the quarter being the slowest in a decade [...]

We remain confident that our clear strategy and differentiated offer will allow us to continue to outperform our supermarket peers through the remainder of the year.

– Justin King, Sainsbury's CEO

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How the retail landscape is changing for supermarkets

  • Tesco reported its worst sales figures for 40 years last week.
  • The British Retail Consortium reported food sales in the UK are declining for the first time in six years by 0.2%.
  • A recent survey from The Institute of Grocery Distribution estimates that between 2012 and 2017 sales at superstores will grow by just 6%, approximately £3.3bn.
  • Over the same period, takings at convenience formats are expected to rise by more than 28%.
  • Discount retailers will see a growth of 65% and online is expected to rise by a whopping 97.7%.

Sainsbury's like-for-like sales expected to drop

Supermarket giant Sainsbury's are expected to announce a drop of between 1-1.5% in their life-for-like sales later this morning.

Sainsbury's had enjoyed nine years of unbroken sales before the end of last year. Credit: PA

The news comes as chief executive Justin King bows out after 10 years in charge of the supermarket.

This would be the second consecutive quarter of falling sales for Sainsbury’s, which had previously enjoyed nine years of unbroken sales growth under Mr King.

City experts have warned the retail giant has a "tough year ahead".

However, the "Big Four" supermarket cleared £1bn in annual sales for the first time last year and announced plans to expand its convenience store business.

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