Price war bites as Sainsbury’s sales fall for a second quarter

Sainsbury’s is blaming falling food prices and tough market conditions for a second consecutive fall in quarterly sales.

Like-for-like sales dropped 1.1%, excluding fuel, for the second quarter.

Britain's second-biggest supermarket remains under pressure amid a fierce price war which has eroded margins at all the so-called 'Big Four' grocers.

Despite the drop, Chief Executive Mike Coupe remains confident the supermarket is continuing to make progress and would "remain competitive".

"While like-for-like sales were down 1.1%, driven by food price deflation, we delivered like-for-like transaction growth across all channels and total volume growth," he said.

"Sainsbury (Amsterdam: SJ6.AS - news) 's is well positioned to navigate the changing marketplace and we are confident our strategy will enable us to outperform our major peers," Mr Coupe added.

However, Julie Palmer, partner and retail expert at Begbies Traynor (LSE: BEG.L - news) , said the supermarket was not keeping up with its rivals.

"Yet again Sainsbury's has failed to turn around its weak sales performance, in stark contrast to the recent momentum seen by two of its largest competitors, Morrisons and Tesco (Frankfurt: 852647 - news) , whose recovery seems to be gathering pace," she said.

"It remains too early to tell what material benefits Sainsbury's will garner from the integration of Argos ... current sales figures look promising," she added.

Sainsbury's recently completed a £1.4bn takeover of Argos, which has created a 2.3% increase in like-for-like sales for the quarter.

The group is on schedule to open 30 Argos digital outlets in Sainsbury's stores by Christmas and 200 new digital collection points by the end of the year.