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Market Commentary

​​Weekly Retail & Leisure News - 11 May, 2015

Sainsbury’s and Morrisons report losses

Sainsbury’s has reported its first annual loss in a decade after being forced to cut prices and write down the value of its stores and property assets. The company fell £72m into the red in the year to March 14, before tax, after £628m of impairment and onerous contract charges relating to sites where it no longer plans to build supermarkets. Total sales declined by 0.7%, excluding fuel, to £23.8bn. Online sales rose over 7% to £1.1bn and sales of non-food including clothing rose 9%. Tim Vallance, Head of UK Retail at JLL commented: “Although Sainsbury’s announced a loss, it isn’t as bad as some analysts were predicting and in relation to Tesco’s huge impairments last week, Sainsbury’s write-downs seem modest. Tesco, Sainsbury’s, Asda and Mossisons have been reacting to unprecedented and unpredicted changes in consumer habits which have led to grocery shopper promiscuity and smaller more frequent shopping trips.”

Morrisons also released results last week, with the grocer underperforming its Big Four peers, amid a continuing intensification of price competition to attract consumers. The retailer reported that LFL sales excluding fuel fell 2.9% in the three months to May 3, a worse performance than the previous quarter when sales dropped 2.6%. The Big Four supermarkets continue to come under pressure from the discounters, Aldi and Lidl, both in terms of market share and positioning.

In positive news, Superdry have announced more positive results this week as their new strategy appears to have paid off. SuperGroup’s LFL sales rose 11.3% in the six months to April 25, a strong turnaround following disappointing results in the previous six months. Full year LFL sales were 4.8% up on the previous year. The retailer has 97 UK stores and has opened 24 new stores in the last year globally; the JLL Retailer Services team currently advise Superdry on their UK store acquisition strategy.

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