Sainsbury's expected to show continued growth in sales despite wet weather

The supermarket giant will brief its shareholders on its performance this week

Sainsbury's is poised to unveil continued sales growth for the recent three months, although the wet weather and ongoing cost-of-living worries may have taken a toll.

The supermarket giant will brief its shareholders on its performance throughout the quarter ending in May, with the figures set to be disclosed on July 2. Investors and market experts are eager for insights into consumer mood during the spring and early summer period.

HSBC analysts forecast a 4.7% rise in grocery sales or 5.5% on a like-for-like basis for the company. This would mark a modest deceleration from the final quarter of the last financial year, which saw a 7.3% surge in total grocery sales.

Yet, this anticipated slowdown is largely attributed to the relaxation of food and drink inflation rates. Back in April, Sainsbury's reported an uptick in volume growth as customers began to notice prices either dropping or stabilising.

The retailer is expected to highlight further volume growth progress, following a successful bid last year to attract more customers and expand its slice of the UK grocery market share. Despite the soggy conditions in April and May potentially affecting shopper behaviour, analysts predict that Sainsbury's will maintain its sales momentum in the forthcoming update.

Paul Rossington, HSBC's chief of European consumer research, commented: "We expect another strong quarter of core grocery growth despite slow start to spring and summer season." In its last update in April, the supermarket chain pointed out some weaknesses in general merchandise, including its Argos division which has been shutting down stores over the past year.

Investors will be optimistic that easing inflation in certain areas will bolster demand for high-value items in general merchandise, such as home technology and furnishings.

Meanwhile, Sainsbury's recently agreed to sell the majority of its banking business to NatWest earlier this month. This move is part of the retail group's strategy to streamline its operations, having previously stated it was considering winding down its banking operations.

Analysts have expressed positivity about the situation, and the company's wider efforts to concentrate more on its core Sainsbury's store and online businesses. Clive Black from Shore Capital viewed the "announcement as another important stepping stone in the simplification of the Sainsbury business and whilst not a surprise, we welcome this development."

He added: "Meanwhile, Sainsbury's is starting the expansion of its Grocery footprint within its retail estate whilst progressing its strong food assortment, which is now well and truly lapping market share gains."