Rising prices and fears of a consumer spending downturn are set to be key themes when supermarkets Sainsbury’s and Morrisons report figures this week.
Under-pressure food sales will be in sharp focus when Sainsbury’s kicks off with its full-year results on Wednesday.
The Big Four chain revealed a 0.5% fall in like-for-like supermarket sales, excluding fuel, in its fourth quarter to March 11, down from a rise of 0.1% in the previous three months.
While it said sales would have risen by 0.1% had it not been for the later Mother’s Day and Easter this year, the group warned over “very competitive” trading and price pressures from the weak pound.
Overall sales were boosted by a robust performance from its recently acquired Argos chain, which notched up a 4.3% rise in like-for-like sales over the nine weeks.
The Argos sales hike helped lift group-wide comparable sales into positive territory, up 0.3% in the fourth quarter.
Analysts are pencilling in underlying annual pre-tax profits of £578million, including Argos, but experts at Jeffries said their forecasts point to a 15% decline in earnings over the second half with Argos stripped out.
Morrisons is expected to report steady sales growth when it releases first quarter results, despite facing industry pressures including rising food prices linked to the post-Brexit vote collapse of the pound.
Like-for-like sales growth is expected to reach 1.7% in the first quarter, according to Jeffries, while Shore Capital is forecasting an increase of between 1.75% to 2% during the period.
Analysts say Morrisons is in a better position to handle a tougher trading environment than its peers, with retailers widely expected to suffer as shoppers reign in spending amid rising inflation.