Despite hopes that performance was improving, Sainsbury's has defied investors' predictions and is continuing to lose market share to Asda.
Even with the launch of its Nectar loyalty card and endorsements from Jamie Oliver, it is feared Sainsbury's may lose its place as the UK's number two supermarket to Asda by Christmas, although it is pinning its hopes on a repeat of last year's strong festive showing.
One city analyst said: 'This isn't good news for Sainsbury's. The Taylor Nelson Sofres (TNS) data shows there hasn't been a miracle from Nectar. Sainsbury's is still losing out to Tesco and Asda. Any time now, Asda will take over the number two spot from Sainsbury's and it could happen by Christmas.' Sainsbury's chief executive Peter Davis said he was pleased with the store's progress, however. He commented: 'There's no doubt that market growth has slowed. It's getting tougher. Asda, Tesco, Waitrose and Morrisons are all running well. And I would include Sainsbury's in that.
'We've got a cracking range of food. We had a bloody good Christmas last year. Let's hope customers are out there with their purses this year.' He also said that the group would be bolstering its non-food offer to fend off the competition.
Operating profits at Sainsbury's rose 15 per cent to £286 million during the half-year, which includes e-commerce costs and profit share.
The TNS figures show strong results for Morrisons, but continuing bad news for Safeway. The retailers' most recent sales growth has been barely one per cent, which was blamed on reduced discounting but means margins in the first half need to be even better to compensate for this.