LONDON British supermarket Sainsbury's (SBRY.L) continued to outperform rivals in the early weeks of the year, industry data showed on Tuesday, providing reassurance for investors ahead of the takeover of Argos-owner Home Retail HOME.L.
Total sales at Sainsbury's rose 0.6 percent year-on-year in the 12 weeks to Jan. 31 and its market share edged up 0.1 percentage points to 16.8 percent, market researcher Kantar Worldpanel said on Tuesday .
Sainsbury's said last week it had agreed a 1.3 billion pounds deal to take over Home Retail. It will be keen to see its share price supported, given the equity component of the offer.
Its shares were up 1.7 percent at 247.2 pence at 0900 GMT.
Sainsbury's has shown greater resilience to the rise of the German discounters, Aldi [ALDIEI.UL] and Lidl [LIDUK.UL], than its "big four" rivals -- market leader Tesco (TSCO.L), Wal-Mart's (WMT.N) Asda and Morrisons (MRW.L).
It was the sixth Kantar data set in a row that Sainsbury's has increased its sales. All of the other big four players saw sales fall and lost market share.
Though Tesco's sales fell 1.6 percent, it did show signs of improvement, with its best outcome since September last year. Its shares were up 1.7 percent at 175.4 pence.
Morrisons' sales decline lessened to 2.2 percent. Asda remained the sector laggard with sales down 3.8 percent.
Both the discount retailers saw their growth accelerate – Lidl to 18.7 percent and Aldi to 13.7 percent.
Kantar Worldpanel said overall UK grocery market sales rose 0.2 percent over the 12 weeks.
"Consumers are clearly striving for a healthier start to the year and have turned to fresh foods, particularly fruit and vegetables, which have both grown sales by 5 percent," said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.
The researcher said grocery deflation was 1.6 percent over the period, reflecting the impact of Aldi and Lidl and the market's competitive response, as well as deflation in major categories such as crisps, eggs and butter.
($1 = 0.6926 pounds)
(Reporting by James Davey and Paul Sandle; Editing by Kate Holton and Keith Weir)