All eyes on Sainsbury's as Tesco plans French alliance

Sainsbury's is set to report a dip in first quarter sales this week, with boss Mike Coupe expected to be questioned on the progress of the supermarket's £12bn merger with Asda.

Monday, 2nd July 2018, 11:12 am
Updated Wednesday, 4th July 2018, 6:16 pm
Sainsbury's at Blackpool's Talbot Gateway
Sainsbury's at Blackpool's Talbot Gateway

The grocery giant is tipped by analysts at Barclays and Jefferies to report a 0.1 per cent fall in like for like sales in the three months to July. It compares with a 0.9 per cent increase in the fourth quarter.

James Grzinic, of Jefferies, said that the trading update would be “sluggish”, blaming soft demand for general merchandise products at Argos.

Focus is set to fall on the Asda merger, with Mr Coupe to face further probing over the deal as analysts turn their attention to the Competition and Markets Authority investigation.

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James Anstead, analyst at Barclays, said: “We have long thought that the merger of Sainsbury’s and Asda makes sense, the question is whether the competition remedies will render the proposed deal uneconomic.”

The speculation comes as Tesco today announced it is hoping to team up with French Supermarket giant Carrefour in a "strategic alliance" to cut prices and get a leg up on competitors.

The long-term deal will be covered by a three-year framework and see the two companies form a "strategic relationship" when dealing with global suppliers.

It will also entail the joint purchasing of their own-branded products.

A statement explained the alliance will "enable both companies to improve the quality and choice of products available to their customers, at even lower prices thereby enhancing their competitiveness".

Tesco and Carrefour claim the agreement would also create "significant opportunities" for their suppliers.

A formal agreement is expected within the next two months.

Tesco chief executive Dave Lewis said: "By working together and making the most of our collective product expertise and sourcing capability, we will be able to serve our customers even better, further improving choice, quality and value."