Yahoo Finance Sainsbury's says "tough weather" has weighed on volumes in recent weeks
Investing.com -- Shares in Sainsbury (LON:SBRY) dropped in morning trading in London on Tuesday after Britain's second-biggest supermarket chain flagged that adverse weather had weighed on recent volume growth despite a cooling in cost-of-living pressures.
Sales growth at the company's key grocery business slowed to 4.8% in the first quarter, down from 7.3% in the prior three month period. General merchandise and clothing sales also decreased by 4% and Sainsbury 's Argos retail unit was hit by sluggish demand for consumer electronics, particularly in gaming, the firm said in a statement.
Total like-for-like sales growth excluding fuel in the 16 weeks to June 22 eased to 2.7% from 9.8% a year ago. Analysts had anticipated 3.0%, according to a company-compiled consensus forecast cited by UBS.
However, the company backed its forecast for annual retail underying operating profit of 1.01 billion pounds to 1.06 billion pounds, or an increase of 5% to 10% versus the prior year, as well as free cash flow generation of at least 500 million pounds.
Sainsbury's added that it expects to return at least 250 million pounds to shareholders once it has completed the sale of its core banking business to lender NatWest and secured the "future model" of its Argos Financial Services division.
The UBS analysts said Sainsbury's results presented a "reassuring" update on its grocery segment, noting an increase in primary shoppers that is driving higher basket sizes.
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