Somerfield joins in sales slide

BID target Somerfield said sales fell in the second half year, as it suffered from the slowdown in consumer spending and increasing fierce competition in the supermarket and convenience store sector.

Britain's fifth-biggest supermarkets retailer said group like-for-like sales, which strip out the effect of new and closed stores, fell 1.5% in the 25 weeks to 30 April. In the first half of the year sales rose 0.6%.

The group includes Kwik-Save stores, and these more downmarket outlets performed worse than the Somerfield-branded stores. The trading update follows a steady stream of poor High Street news in recent weeks from individual retailers, and yesterday from the British Retail Consortium.

But one analyst said food retailers were traditionally less affected by consumer spending cutbacks, and increased competition from bigger rivals was more of a problem for Somerfield.

'It's more an issue of competition for them,' said Sanjay Vidyarthi, retail analyst at broker Teather & Greenwood. 'They have been pressured by the likes of Tesco and Sainsbury moving into the convenience store format.'

Chief executive Steve Back admitted that 'trading conditions remain challenging' but claimed that the group would become more robust as more Kwik-Save stores are transformed to the Somerfield brand, and with the recent acquisition of forecourt convenience stores from Texaco.

Britain's top independent co-operative retail group United Co-operatives said last week it had made a bid approach for Somerfield. The approach followed expressions of interest from a consortium of Icelandic retailer Baugur with property mogul Robert Tchenguiz and a British buyout firm.