Sainsbury’s sales dented by weak general merchandise and clothing demand

Mike Coupe, CEO of Sainsbury's, poses for a portrait at the company headquarters in London, on May 1, 2019. (Reuters)
Updated 03 July 2019
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Sainsbury’s sales dented by weak general merchandise and clothing demand

  • Sainsbury’s is the UK’s fifth-largest retailer by volume

LONDON: British supermarket group Sainsbury’s reported a third consecutive quarter of declining underlying sales, hurt by weak clothing and general merchandise markets.

The group, which had its £7.3 billion ($9.2 billion) takeover of rival Asda blocked by the UK competition regulator in April, said on Wednesday its like-for-like sales, excluding fuel, fell 1.6 percent in the 16 weeks to June 29, its fiscal first quarter.

The outcome compares with analysts’ forecasts in a range of down 1.1 percent to down 2 percent and a fall of 0.9 percent in the previous quarter.

“Retail markets remain highly competitive and promotional and the consumer outlook continues to be uncertain,” Sainsbury’s said.

The group said that while total grocery sales fell 0.5 percent, general merchandise sales declined 3.1 percent and clothing sales were down 4 percent.

Despite the sales falls, Sainsbury’s said it gained market share in key general merchandise categories and in clothing, where it is now the UK’s fifth largest retailer by volume.

Recent official data and updates from peers, including market leader Tesco, had already outlined a difficult backdrop for retailers in the period, reflecting ongoing political uncertainty and a tough comparison with the same quarter last year when Britain enjoyed record hot weather and major events including a royal wedding and the men’s soccer World Cup.

With Sainsbury’s shares down 37 percent over the past year, Chief Executive Mike Coupe is under pressure to show the group can prosper on its own after the Asda debacle. He will face investors on Thursday at the group’s annual shareholders’ meeting. In May he vowed to improve stores, cut prices on daily essentials and invest in online to restore sales growth.

Since February, Sainsbury’s has reduced prices on more than 1,000 own-brand products including dairy, meat, fish, poultry and fresh fruit and vegetables.

Prior to Wednesday’s update, analysts were forecasting that profits would go backwards in Sainsbury’s 2019-20 year. The pretax profit consensus was £632 million, down from the £635 million made in 2018-19.

Sainsbury’s market capitalization is about £4.43 billion.


Funds managing $2 trillion urge cement makers to act on climate impact

A general view of Gulf Cement Company in Ghalilah, Ras al Khaimah, United Arab Emirates July 16, 2019. (REUTERS)
Updated 23 July 2019
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Funds managing $2 trillion urge cement makers to act on climate impact

  • The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency, meaning that if it were a country, it would be the third largest emitter, behind the US and China

LONDON: European funds managing $2 trillion in assets called on cement companies to slash their greenhouse gas emissions on Monday, warning that a failure to do so could put their business models at risk.
Some asset managers are ramping up engagement with heavy polluters to demand a faster transition to a cleaner economy.
“The cement sector needs to dramatically reduce the contribution it makes to climate change,” said Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change, which has more than 170 members, mainly European pension funds and asset managers. “This is ultimately a business-critical issue for the sector,” Pfeifer said in a statement.
The group said investors had written to cement or construction materials companies including Ireland’s CRH, Franco-Swiss group LafargeHolcim and France’s St. Gobain to demand they achieve net zero carbon emissions by 2050.
They also noted that Germany’s HeidelbergCement had already adopted the target. The funds urged all cement companies to align themselves with the 2015 Paris agreement to combat global warming, engage with policymakers to ensure an orderly transition to a low carbon economy, and increase their reporting of climate risk.
“Construction materials companies may ultimately risk divestment and lack of access to capital as an increasing number of investors seek to exclude highly carbon-intensive sectors from their portfolios,” said Vincent Kaufmann, CEO of the Ethos Foundation.

FASTFACT

The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency.

Signatories collectively manage assets worth $2 trillion and include Aberdeen Standard Investments, BNP Paribas Asset Management, Sarasin & Partners and Hermes EOS.
Although funds are increasingly engaging with companies from airlines to carmakers on emissions, few are calling for the systemic transformation of the global economic system that scientists increasingly argue is needed to prevent runaway climate breakdown.
The cement industry produces 7 percent of the world’s carbon dioxide emissions, according to the International Energy Agency, meaning that if it were a country, it would be the third largest emitter, behind the US and China.
With climate campaigners traditionally focused on fossil fuel companies, the European cement sector has received comparatively little scrutiny until recently.
On Tuesday, police arrested six climate activists from civil disobedience group Extinction Rebellion at a protest aimed at disrupting a site in east London belonging to London Concrete, a unit of LafargeHolcim.
In June last year, a report from think-tank Chatham House concluded that although there was no “silver bullet” to reduce emissions from cement, it should be possible to deploy a range of policies and technologies to achieve deep decarbonization.