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Sainsbury’s boss warns ‘no deal’ Brexit will disrupt supply of toys to UK ahead of Christmas

Under-pressure Sainsbury’s boss Mike Coupe warned today that a ‘no deal’ Brexit on October 31st could ‘significantly disrupt’ the supply of food and even toys into the UK ahead of the all-important festive period. 

The chief executive of the UK’s second biggest supermarket said that any hold ups at Britain’s ports could be ‘very disruptive to our business and potentially to people’s Christmas this year’.

His comments come as Sainsbury’s reported a worse-than-expected 1.6 per cent slide in sales for the last four months and said it was impacted by a ‘tough retail environment’.

The grocer was weighed down by its general merchandise (Argos) and fashion divisions, which fell 3.1 per cent and 4.5 per cent respectively. 

It said it is missing last year’s summer heatwave, when the unprecedented warm weather, the World Cup and the royal wedding gave sales of BBQ food, beer, bikinis and paddling pools a boost. 

On a call with journalists, Coupe said ‘there isn’t a worse date they could pick’ than October 31st for a disorderly exit from the EU. 

He explained that it would not only interrupt the food supply chain, but also the supply of goods like toys and electricals, which are imported from overseas and are in high demand around Black Friday and Christmas.     

Coupe is expected to face some criticism from some investors at the supermarket’s annual general meeting on Thursday, following the collapse of its planned mega-merger with Asda earlier this year. 

The major setback dragged its share price to historic lows and raised questions about how the 150-year old chain will keep pace with its grocery rivals and the fast growing discounters Aldi and Lidl.     

Sainsbury’s stemmed some of the decay in its grocery division during the quarter. Food sales fell 0.5 per cent – slower than the 0.6 per cent decline recorded in the previous quarter.    

It has tried to win over shoppers in recent months by lowering prices, with reductions on more than 1,000 food items.

The supermarket has also committed to reduce its net debt by at least £600million over the next three years, and outlined plans to improve 400 of its stores. 

Coupe said: ‘We continue to adapt our business to changing shopping habits and made good progress in a challenging market.’ 

He pointed out that, despite the challenging trading environment, Sainsbury’s gained market share in clothing and overtook Tesco to become the UK’s fifth largest retailer by volume.  

Sainsbury’s beleaguered shares ticked up by around 2 per cent in early trading on Wednesday to £2.03. 

Commenting on the firm’s recent performance, AJ Bell investment director Russ Mould said: ‘Now that a merger with Asda is no longer going to save the business, Sainsbury’s has to go it alone and find a way to survive and – most importantly – prosper.

‘Unfortunately it’s hard to identify Sainsbury’s edge and how it will bounce back. There is still a sense that Sainsbury’s doesn’t really know what it wants to be.’ 

Mould continued: ‘Without a unique selling point it will be hard to have clear marketing strategies, targeting the right type of people and commanding customer loyalty.

‘A business lost at sea is just going to drift, either bobbing along until it reaches an unknown destination or it will sink.’

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