Sainsbury’s bags Christmas sales rise after online shopping boost
Sainsbury’s today posted a strong rise in sales over Christmas as a record number of customers bought their shopping online.
The supermarket chain said like-for-like sales were up 9.1 per cent during the festive period, despite people holding smaller gatherings due to lockdown measures.
The company said it sold smaller turkeys and more beef and lamb than normal. However, more Brits cashed out on Sainsbury’s premium Taste the Difference range, which saw sales rise 11 per cent.
Premium champagne sales also rose 52 per cent as people celebrated at home.
For the third quarter, like-for-like sales excluding fuel rose 8.6 per cent, with total retail sales up 6.8 per cent.
The pandemic also sparked a record number of people choosing to order their Christmas meals online.
Sainsbury’s delivered 1.1m orders in the 10 days to Christmas — double the number from last yast — while online grocery sales surged 128 per cent.
The supermarket said it expects full-year profit before tax of at least £330m, down from £586m last year. This includes its decision to pay back £410m in business rates relief.
The group also reported an eight per cent rise in sales for Argos, with nearly 90 per cent of purchases made online.
This was boosted by growth in Christmas gifts, gaming consoles and TVs, which helped to offset a weaker Black Friday performance.
The robust trading will come as a much-needed boost to Sainsbury’s, which announced plans to cut 3,500 jobs in November.
It said the majority of the job losses would come from Argos, which will also undergo a store closure plan.
“The last few months have been really tough for many people and we are all dealing with a lot of change and uncertainty again,” said Sainsbury’s chief executive Simon Roberts.
“Given these challenging circumstances, we really focused on doing the best possible job for our customers this Christmas.”
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdowne, said it was “impressive” that the company’s general merchandise sales had also jumped during the period.
“Sainsbury’s has been collecting many more clicks for not just food orders but general merchandise as well with sales growth of 6 per cent,” she said.
“The ease of pick-up of gifts from Argos counters inside the supermarkets is likely to have helped boost Argos sales by 8.4 per cent.
“Given the success of Argos, compared to in-store ranges which saw a fall of 5.4 per cent, we could potentially see a scaling back of J Sainsbury branded merchandise in the future.”
Streeter added: “Ongoing price cuts to stay competitive against its rivals are continuing, and that is likely to put pressure on margins if the bun fight for the value end of the market continues.’’
Richard Hunter, head of markets at Interactive Investor, also said Sainsbury’s will face pressure to keep costs low in order to beat competitors.
“For Sainsbury, which operates in a fiercely competitive arena, the outlook will remain challenging, particularly given the pressure on pricing which the sector demands,” he said.
“There will also be significant costs arising from the redefinition of the business in the form of the overhaul of the Argos store estate and the extension to its convenience store format in the shape of its new “Neighbourhood Hub”.