J. Sainsbury Plc, Britain's third-largest supermarket group, said its sales rose and gave a relatively upbeat view of consumer spending, bucking the trend of retailers' gloomy predictions.
Sales at Sainsbury's stores open at least a year rose 3.7 percent, excluding fuel, in the third quarter to December 29 and Chief Executive Justin King said on Thursday that trade in the crucial Christmas period was "conspicuously" ahead of internal forecasts.The headline figures were broadly in line with analysts' expectations and helped to calm investors' concerns after bleak predictions from retail bellwether Marks and Spencer on Wednesday that prompted a retail sector sell off.
"Consumers are tightening their belts but I don't think in any way that spells doom and gloom. I think it just means us retailers have to sharpen our pencils," King told reporters. Sainsbury's shares rose 4.3 percent to 380.4 pence having lost nearly 10 percent in the previous five days due to intensifying concern among investors that higher mortgage costs and energy prices, and weakening housing markets were skewering spending.
A report in The Times on Monday saying Sainsbury's had missed internal forecasts also hit its share price earlier this week. Bernstein Research analyst Christopher Hogbin said Sainsbury's update, although only in line with forecasts, "should come as a relief to investors given the recent sharp sell-off of the stock on fears that trading might miss expectations".
Sainsbury's announcement it had achieved its goal of 2.5 billion pounds of additional sales since March 2005 three months ahead of time was "an encouraging sign" for the next stage of its strategy, Hogbin said. King's remarks chimed with solid trading at Germany's Metro , which met expectations with a 10 percent rise in group sales, supporting forecasts that Europe's supermarket groups will be among the winners of Christmas.