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Store wars - Sainsbury's beats Tesco's like-for-like sales

7th October 2009 Print
This morning Sainsbury's announced its like-for-like sales more than doubled Tesco's as consumers continue to shop around for value. Nick Raynor, investment adviser at The Share Centre explains why despite good results, Tesco remains the stockbroker's preferred supermarket group.

"Sainsbury's like-for-like sales rose 4.6% which compares favourably to the 2.1% rise rival Tesco announced yesterday. With 18.5m transactions each week, Sainsbury's continues to perform well under tough market conditions. In particular, its expansion into non-food, such as its TU clothing brand, has grown at nearly three times the rate of food, while online grocery sales were up 20 per cent on the year.

"Sainsbury's continues to snap at Tesco's heels in terms of market share and competing discounts. Consumers have proven to be more fickle than ever, shopping around for the best value on the high street. However, both supermarkets have fared better than other retailers in the downturn thanks to their focus on essential items and rising food prices.

"Despite Sainsbury's encouraging results, Tesco remains a firm favourite with consumers, occupying the largest market share in the sector. We recommend Tesco as a buy for those investors looking for more stability during the downturn and long-term growth. Tesco's portfolio is far more diverse and it continues to perform well both at home and away.

"However, we continue to list Sainsbury's as a hold for those looking for income due to its solid dividend of 4 per cent."