Sainsbury's food growth is challenged by a wider UK retail slowdown

Grocery sales at J Sainsbury rose 5.4% in the third quarter ended Jan. 3, while overall like-for-like sales excluding fuel increased 3.4%, below analysts' expectations as weaker clothing and electricals weighed on results.

J Sainsbury Plc reported stronger grocery sales over the holiday season but weaker demand for clothing and electricals. Grocery sales grew 5.4% in the third quarter ended Jan. 3, and overall like-for-like sales excluding fuel rose 3.4%. The overall result fell short of analysts' expectations. The company and analysts linked the pattern to subdued consumer confidence and cost-of-living pressures. Key points: - Grocery sales increased 5.4% in the quarter; like-for-like sales excluding fuel rose 3.4%, which was below analysts' expectations. - CEO Simon Roberts said consumers are focused on cost of living and value, and he expects caution in general merchandise to continue this year. - Shares fell as much as 6% intraday, and several other major UK retailers reported weak holiday trading while discounter Lidl reported stronger results. Summary: Stronger grocery performance was outweighed by weakness in non-food categories, reducing overall sales momentum and prompting an intraday share decline. Management said it is using loyalty offers and price-matching to support grocery sales and expects consumer caution in general merchandise to persist this year. Analysts and industry groups noted the results fit a wider slowdown in UK retail during the key trading period.