Same-store sales at British supermarket group J Sainsbury Plc rose 4.1 per cent in the second quarter despite continued price cutting caused by fierce competition in the grocery market.
A year after the launch of a far-reaching revitalisation programme, Sainsbury said in a statement the performance represented the third consecutive quarter of like-for-like sales growth achieved despite a difficult market.
But the company said it had increased its level of provisioning for bad or doubtful debt at its Sainsbury's Bank unit, and said it expected the financial services arm - run in a joint venture with financial services firm HBOS - to report a small loss for the first half of the year.
Total sales increased by 6.6 per cent in the quarter, while same-store sales excluding fuel rose 2.8 per cent.
Sainsbury, which is beginning to bounce back from years of market share losses to the two UK sales leaders, Tesco and Asda , said its Achilles heel of in-store product availability and its price position were both improving.
Fierce competition among the top three players has driven down prices to the extent that an average basket of groceries is cheaper in nominal terms than it was in 1997, even discounting inflation.
Sainsbury's said grocery prices had fallen by 1.7 per cent in the quarter, although petrol price increases had meant total inflation of 0.9 per cent for the period. Last month, Tesco said UK same-store sales rose 6.7 per cent excluding fuel, but said higher oil prices were having an impact on costs and consumer confidence.