LONDON (Reuters) - Sainsbury's recorded the smallest sales decline among Britain's big four grocers in the latest 12 week period, showing tentative signs of improvement after nearly two years of underperformance, according to industry data published on Tuesday.
Sainsbury's <SBRY.L> had its proposed 7.3 billion pound takeover of Walmart-owned <WMT.N> Asda blocked by Britain's competition regulator in April. Its shares were up 1.9% at 0906 GMT, paring losses over the last year to 43%.
Market researcher Kantar said Sainsbury's sales fell 0.6% in the 12 weeks to Aug. 11. That compared with falls of 1.6%, 1.5% and 2.7% at industry leader Tesco <TSCO.L>, Asda and Morrisons <MRW.L> respectively.
“While each of the big four lost (market) share, Sainsbury’s will be cheered to be the strongest performer among this cohort for the first time since November 2017," said Fraser McKevitt, Kantar's head of retail and consumer insight.
He said that bucking the market-wide trend towards own-label products, sales of branded goods at Sainsbury’s rose by 1.5%, driven by higher levels of promotion and lower prices.
Sainsbury's' boss Mike Coupe is under pressure to turn around the group's fortunes after the failure of the Asda deal and three straight quarters of declining underlying sales.
On Saturday, Sainsbury's denied a newspaper report it was talking to internal candidates about succession planning for Coupe.
The group is cutting prices on daily essentials while investing in stores, technology and online services to meet the challenges of a fast-changing industry, where customers are shopping more frequently, demanding more convenience, buying more online and also flocking to German-owned discounters Aldi and Lidl.
Sainsbury's will update on strategy on Sept. 25 when it hosts a capital markets day for investors.
Aldi and Lidl's sales were up 6.2% and 7.7% respectively in the 12-week period, taking their combined market share to 14%.
Kantar said total British grocery sales were flat over the 12 weeks, reflecting tough comparisons with 2018's strong summer, which was boosted by a heatwave and the men's soccer World Cup.
Total sales had fallen 0.5% in Kantar's July data set - the first decline since June 2016.
“The memory of last year still looms large for retailers and this summer’s comparatively poor weather, combined with low levels of like-for-like price rises, have made growth hard to find for retailers," said McKevitt.
Kantar said grocery inflation over the 12 weeks was 0.9%. It said prices rose fastest in markets such as crisps, canned fish and frozen fish, while falling in canned cola, instant coffee and chilled fruit juices.
Shares in Morrisons, which reports first half results on Sept. 12, were down 0.4%. Shares in Tesco were down 1.1%.
(Reporting by James Davey; Editing by Kate Holton and Mark Potter)