Retail giants set for battle

SUPERMARKET heavyweights Tesco and J Sainsbury are set to battle it out this week for retail supremacy, when they both announce sales results for the past quarter.

Tomorrow, Tesco is expected to report an underlying rise in sales of between 4 and 4.5 per cent, lagging behind J Sainsbury’s predicted 7 per cent growth.

Tesco, the market leader, has been losing share to rivals such as Wm Morrison and discounters as customers switch loyalties to find the best deals. Frozen food chain Iceland last week reported a 16 per cent like-for-like growth on the year before.

Tesco has tried to fight back, relaunching itself last year as “Britain’s Biggest Discounter” by introducing a new value range and slashing prices on 8,000 product lines. Despite having a deflationary effect which has hit the group’s revenue, chief executive Sir Terry Leahy’s cuts have helped stem the loss of consumer traffic to discount stores. Tesco will remain a City favourite due to its gigantic £3bn record profit and developed international expansion.

But the supermarket giant will face a results show-down as arch-rival J Sainsbury reports the next day with almost twice the sales growth expected. Sainbury’s chief executive Justin King recently collected a £5m total remuneration package for hitting his targets to rebuild the business.

At the start of the downturn analysts predicted J Sainsbury’s would be the big loser, facing pressure from the discounters due to its top-end position. But since then King has transformed the chain’s growth, driven by its own-label basics range.