Sainsbury’s sales boosted by strong grocery performance
Sainsbury’s has posted an increase in first half sales after a strong performance in its grocery business, particularly in food.
In the six months to 14 September, total retail sales increased by 3.1% with grocery sales climbing by 5% as the supermarket continued to invest in Your Nectar Prices and price matching against Aldi.
Sainsbury’s said the grocery uplift was primarily driven by food volume growth as existing shoppers spent a greater amount and more customers used the retailer for their big shop.
However, general merchandise and clothing sales decreased by 1.5% in the period as softer demand for consumer electronics and toys was partially offset by an increase in clothing sales.
Meanwhile, Argos sales came in below expectations with a decline of 5% following poor weather at the start of the summer, weak demand for higher ticket items, and slower online traffic.
Simon Roberts, chief executive of J Sainsbury, “Our food business is going from strength to strength and we’re making the biggest market share gains in the industry, with continued strong volume growth. More and more customers are coming to us for their big food shop, recognising our winning combination of value, quality and service.
“Reflecting our leading quality, more customers are choosing Taste the Difference, with sales up 18%, the strongest premium private label growth in the market. And with the biggest ever increase in customers’ value perception, we’re outperforming the market across the whole basket, particularly in core fresh food categories.
“Our grocery volume growth has delivered strong profit leverage at Sainsbury’s, partially offset by a tough first quarter at Argos. Argos trading has improved through the second quarter and in more recent weeks, so we continue to expect to deliver strong retail underlying operating profit growth and free cash flow generation for the full year.”
Meanwhile, retail underlying operating profit grew by 3.7% to £503 million after strong Sainsbury’s and Nectar growth was partially offset by a lower Argos contribution..
Looking ahead, Sainsbury’s said it remains confident of delivering strong profit growth in the full year due to increased grocery volume and a better performance from Argos in the second half.
Roberts added: “Our brilliant colleagues and suppliers are at the heart of everything we do and I want to thank them for all their hard work as we set ourselves up to deliver a fantastic Christmas for our customers.
“As we head into the festive season, there is real energy and excitement at Sainsbury’s and Argos and we’re expecting another strong performance.”
