The headlines were about Sainsbury’s beating Tesco this week, but investors took a different view, punishing Sainsbury’s instead.

At one stage on Wednesday, shares in Sainsbury’s had slumped by 5% after the supermarket reported a 1.4% increase in like-for-like sales for the quarter to 9 June.

That may look a lot better than the 1.5% drop in quarterly UK like-for-likes reported by Tesco on Monday. However, the Sainsbury’s sales figures came in 0.2% below the consensus forecast that the market had been expecting.

Furthermore, the gap between the sales performances of the two supermarkets narrowed compared with the previous quarter.

Sainsbury’s sales were 1.2% down quarter-on-quarter, while Tesco’s were up by 0.1% quarter-on-quarter. And the busy trading week running up to the jubilee was included in the Sainsbury’s numbers but not in the Tesco ones. Sainsbury’s said it benefited from about two million more customer transactions than normal over the week.

“The gap between the two supermarkets’ growth has narrowed materially - some may have missed that but investors did not,” said Shore Capital analyst Clive Black.

As Sainsbury’s share price fell sharply following its update, shares in Tesco shot up by 1.5% in initial trading after its quarterly sales update.

Black said the signs were that senior management at Tesco were working hard to turn the business around and that the retailer had spent little time talking about past performance at the “very short and sweet” quarterly sales presentation.

Another retailer facing an uphill task is WH Smith, which reported a 3% drop in quarterly like-for-like sales this week. The result was at least an improvement on the 5% sales drop it posted in the first half of the financial year.

Investors were encouraged and the company share price moved up by 2.5% to 484p in early trading on Thursday.

“The shares have fallen around 15% since the end of March, which is overdone in our view given the more defensive small-ticket nature of the business, with average transaction values around £5, and the group’s consistent delivery of gross margin and profit expansion,” said Investec analyst David Jeary.

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