1Q20 Trading Update Sainsbury’s reported its 1Q20 trading update, for the 16 weeks ended June 29, 2019, with comparable sales missing the consensus estimate. The highlights are as follows:

• Comparable sales ex fuel declined 1.6% year over year, compared to a 0.9% decline in the previous quarter and missing the consensus estimate of 1.4% decline recorded by StreetAccount.
• Total sales ex fuel fell 1.2% year over year, compared to a 0.2% decline in the previous quarter and in line with the consensus estimate.
• By segment, grocery sales fell 0.5% year over year, compared to 0.6% decline in the previous quarter and ahead of the consensus estimate of a 0.7% decline. General merchandise sales decreased 3.1% compared to 1.5% growth in the previous quarter and below the consensus of a 2.1% decline. Clothing sales fell 4.5% compared to the 1.6% decline in the previous quarter and below the consensus of a 2.5% decline.

Other Highlights

• Since February, the company has cut prices on more than 1,000 own-brand, high-volume products, across dairy, meat, fish, poultry and fresh produce.
• The company introduced 33 new plant-based lines in the quarter. Sainsbury’s says it is the leading UK retailer of chilled plant-based food with an almost 30% market share.
• Following the successful trial of an enhanced beauty range that drove double-digit growth in beauty sales in trial stores, the company will roll out the offering to 100 supermarkets this financial year.
• The company’s convenience channel grew 1.5% and online channels grew 5.1% in the quarter.
• Sainsbury’s noted that general merchandise and clothing market conditions remain challenging and poor weather conditions impacted demand in some seasonal categories. The company continues to gain market share in clothing and key general merchandise categories.
• The company has opened two further Argos stores in Sainsbury's supermarkets, bringing the total to 283.
• Sainsbury’s upgraded 29 Argos stores to digital formats in the quarter and also rolled out Sainsbury's SmartShop self-scan, which helps customers keep track of their spend as they shop and check out without a checkout line. SmartShop is available in 148 supermarkets.

CEO Mike Coupe said:

We continue to adapt our business to changing shopping habits and made good progress in a challenging market. We reduced prices on over 1,000 everyday food and grocery products and improved our relative performance. Our premium taste the difference ranges are growing market share. In a tough trading environment, we gained market share in key general merchandise categories and in clothing, where we are now the UK's fifth largest retailer by volume.

We will invest in 400 supermarkets this year, including adding an enhanced beauty offer in 100 stores. We are accelerating investment in technology: 148 supermarkets now have SmartShop self-scan, 206 Argos stores offer Pay@Browse and we upgraded 29 more Argos stores to digital formats, all helping to make shopping with us quicker and easier.

  Outlook The company says retail markets remain highly competitive and promotional, and the consumer outlook remains uncertain. In FY20, the consensus estimate recorded by StreetAccount predict Sainsbury’s will report revenues of £29.09 billion and EPS of 20.4 pence.