Sainsbury's festive sales surge despite down-sized turkeys
Sainsbury’s is on track for a multi-million-pound profit boost as the major supermarket players continue to benefit from restrictions on “non-essential” retailing.
An unplanned profit upgrade was revealed as bosses at the Big Four grocer said sales in the three months to January 2 were up a solid 8.6 per cent on a like-for-like basis.
Over the key festive period – measured by Sainsbury’s as the nine weeks to the same date – sales were even higher, growing by 9.3 per cent year-on-year.
The like-for-like measure does not include the permanent closure of 120 standalone Argos stores which were not reopened after the first national lockdown in March. On a total basis, sales during the three-month period were up 6.8 per cent.
The group said there was strong growth in both its grocery stores and at Argos, which remained open for click-and-collect orders, alongside huge surges in online deliveries.
Underlying pre-tax profits for the year are expected to hit £330m, compared with previous guidance of about £270m, although this will be down on the £586m banked a year earlier due to the firm agreeing to pay its £410m business rates bill.
Chief executive Simon Roberts said the tighter restrictions on gatherings saw customers turn to smaller turkeys and an increase in lamb and beef sales, but shoppers treated themselves to more premium products.
Susannah Streeter, senior investment and markets analyst at financial services firm Hargreaves Lansdown, said: “Sainsbury’s has unwrapped a strong set of Christmas numbers as shoppers curled up at home to celebrate the season with supermarket treats.
“The supermarkets have been riding the wave of online shopping during the pandemic and Sainsbury’s is no exception seeing online orders rise by 128 per cent in the rush to book up delivery slots.
“The retailer delivered 1.1 million orders in the ten days before Christmas, double last year’s rate.
“The supermarket sector has had to adapt quickly to the rapid change in consumer habits brought on by the pandemic. Sainsbury’s is still on a conveyor belt of change but it’s certainly going in the right direction.”
John Moore, senior investment manager at Brewin Dolphin, noted: “It’s a positive trading update from Sainsbury’s on a number of levels.
“Action taken last year to reinvigorate the core retail business seems to be paying off, with capacity added to online and click-and-collect clearly welcomed by shoppers in the period leading up to Christmas.
“There is also a notable improvement in the clothing division which had previously been a drag. Argos has continued its impressive sales momentum with the dual aspect of delivery or collection in store appealing and, finally, Nectar’s digital membership has moved above six million.”
Argos sales rose 8.4 per cent and non-food sales were up 6 per cent as non-essential retailers were forced to either close stores or only offer click-and-collect services.
Roberts said: “While people had smaller gatherings, they still treated themselves, with Taste The Difference sales up 11 per cent.
“Premium champagne sales were up 52 per cent, Taste The Difference party food was popular throughout December, and people did more home baking than usual, with mincemeat sales up 24 per cent.”