Sainsbury's warns Tesco over own-brand price promise

Sainsbury's boss Justin King has warned he will report rival supermarket Tesco to the Advertising Standards Authority over its new price promise if he believes comparisons between own brand products are inaccurate.

He said: "How on earth do you compare non-brand products? We don't think you can compare the strength of our own brand label with the cut price versions at Tesco and Asda.

"You can be sure we will be pointing out to Tesco where we believe our products are non comparable with theirs."

The threat comes as the country's third-biggest supermarket chain saw a 6.3% surge in sales in its fourth quarter, excluding fuel, thanks to strong growth online and in convenience store sales, as well as picking up customers from rivals, including Tesco and Asda, tainted by the horsemeat scandal.

"The horsemeat crisis has damaged trust in supply chains across the whole grocery industry and we should all sit up and take notice of what that tells us," King said.

He added that Sainsbury's had seen a shift in sales from processed meat towards fresh.

Like-for-like sales were up 3.6%, making it the 33rd consecutive quarter of growth for the business and an impressive turnaround for King after years of struggling.

Full-year sales were up 4.3% following 14 new supermarket and 87 convenience store openings. Sales were up 1.8% on a like-for-like basis.

King said Sainsbury's had more customers than ever before, with 22.9m transactions a week, a boost of 800,000. By comparison, rival Morrisons revealed it lost 400,000 customers a week at its full-year results last Thursday.

He brushed aside any fears that Morrisons may challenge for the number three slot, behind Tesco and Asda, after the smaller rival announced plans to launch an online groceries service and convenience stores.

"All competition is good for customers, so we are very happy with the extra competition."

Last month industry data by Kantar Worldpanel showed Sainsbury's was the only big-four supermarket to gain market share, rising to 17%, with Tesco and Asda seeing slight falls. The dip for Tesco was thought to be because of the comparison with heavy discounting in 2012, rather than shoppers being turned off by the horsemeat DNA found in its lasagne.

Morrisons also lost business and revealed last week it suffered a 7% fall in pre-tax profits with like-for-like sales down 2.1% due to its lack of online groceries or convenience stores.

By comparison, Sainsbury's said online groceries sales were up by nearly 20% year on year, with convenience store trade rising 18%.

A new distribution site was opened to exclusively supply convenience stores in the south-east and London and bosses admitted they looked at snapping up some of the failed HMV, Blockbuster and Jessops sites.

John Rogers, chief finance officer, said: "We did have a look at the stores, but they are all relatively compromised sites and relatively overrated.

"We will potentially approach landlords if these spaces come available, but we won't be dealing with the administrators at the moment."

With competition so fierce on the high street, Tesco's price promise could threaten to undermine Sainsbury's brand match promise, which applies only to branded items.

However, King said he would be happy to go to the Advertising Standards Authority if he felt there was a breach to rules which state that price matching must be on equivalent products.

The ASA said they have yet to receive any formal complaints.

In a sign of supermarket dominance of the high street, Sainsbury's revealed general merchandise sales, which exclude food and clothes, topped £1bn for the first time, 10 years after it started selling products from vacuum cleaners to DVDs.

The results beat market expectations significantly and led to suggestions that the company may have turned a difficult corner.

Caroline Gulliver, retail analyst at Espirito Santo, explained: "Some commentators may attribute Sainsbury's success purely to 'Horsegate', however we think this would be to underestimate the fundamental improvements Sainsbury has been making."