Sainsbury’s shares dip despite £800m shareholder payout plan
Sainsbury’s share price has dipped by over 4 per cent on Friday morning following its Q3 results, which revealed grocery sales at the FTSE 100 giant grew by over 5 per cent during the festive period.
The boss of the supermarket chain said it “won grocery market share for the sixth consecutive Christmas” after grocery sales grew by 5.4 per cent, while total retail sales (excluding fuel) rose nearly 4 per cent.
In an update on its Q3 results for the 16 weeks to 3 January 2026, Sainsbury’s ‘Taste the Difference’ range was the fastest-growing premium own-label brand in the market, with fresh sales up 15 per cent.
However, Argos, which it acquired in 2016 for over £1bn, saw sales fall by 1 per cent over the quarter, and declined by over 2 per cent over Christmas, impacted by “subdued spending on higher-ticket items” and a weak gaming market.
Sainsbury’s combined general merchandise and clothing sales were down over 1 per cent due to “weaker market conditions” and “milder weather”.
“Keep in mind that Sainsbury’s is more exposed to general merchandise than its peers, owing to its ownership of Argos,” stated Aarin Chiekrie, equity analyst at Hargreaves Lansdown.
He explained: “General merchandise is the most cyclical area of the supermarket economy to be in, so being overweight in this arena can really slow sales down when things get tough.”
Sainsbury’s ‘solid Q3 performance’
Despite the weaker general merchandise market conditions, the board stated that the group remains on track to deliver a retail underlying operating profit of more than £1bn.
The listed supermarket giant informed shareholders that its retail free cash flow guidance is now above £550m, up from its previous guidance of more than £500m.
“All in, it was a solid third-quarter performance from Sainsbury’s, and full-year operating profit guidance of more than £1bn remains on track,” Chiekrie added.
Chief executive Simon Roberts explained: “When we strengthened our profit guidance in November, we said we planned to invest in the strength of our competitive position through the most important trading period of the year.”
As a result, in its 2025/26 outlook, there are plans to reaffirm the return of over £800m to shareholders this year, including a £250m special dividend and a £250m share buyback.
This follows Tesco’s results on Thursday. Despite posting ‘strong’ results with boosted market share, its share price also dropped.