Sainsbury's says sales 'solid' in tough market

Sainsbury's has seen modest sales growth

Supermarket group Sainsbury's has reported "solid" sales growth for the past three months in what it describes as a "tough consumer environment".

Like-for-like sales - which ignore the effect of new stores - excluding fuel rose 1.9% in the 12 weeks to 11 June.

The retailer said it had benefited from Easter shopping, good spring weather and the royal wedding.

But it said higher fuel costs were reducing the amount of money people have available to spend.

The company's budget range - Basics - is its fastest growing brand.

Sainsbury's also saw strong growth in its smaller convenience store business, which grew by 20%.

"We've delivered a solid sales performance, in line with our expectations, in spite of the continued tough consumer environment," said Sainsbury's chief executive Justin King.

Sainsbury's first quarter sales figures in its trading update included VAT. On Tuesday, comparable figures from Tesco showed a 1% rise in UK sales for the 13 weeks to 28 May.

Excluding VAT, Tesco's UK sales were down 0.1%. Sainsbury's told the BBC that when VAT was excluded its sales were up 0.9%.

Upbeat mood

Sainsbury's said that sales of clothing and non-food items grew faster than food.

It said that trading conditions remained "very competitive, reflecting the challenging economic backdrop".

"We expect this to be the case throughout the year," it added.

Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said: "The update has narrowly missed estimates, but the company itself was noticeably upbeat about the latest performance.

"In particular, management was at pains to point out that its non-food offerings grew faster than food and, indeed, ahead of the Tesco number yesterday - albeit that Sainsbury is coming from a lower base."