Strong demand for summer goods in its Argos unit and premium food lines in its supermarkets has helped Sainsbury’s record its best quarterly growth in over a year.
During the 16 weeks to 21 June, the group’s like-for-like sales rose 4.7% – an improvement on the 4.0% increase recorded in the previous quarter and ahead of analysts’ expectations.
The core Sainsbury’s chain saw total sales rise 4.9%, with grocery up 5.0% and general merchandise & clothing growing 4.2%. The company noted that its supermarket business has now seen 30 successive periods of growth in customer numbers, with it outperforming the market over Easter. It also benefited “a little bit” from the cyber attack at Marks & Spencer, which led to its customers buying their groceries elsewhere as a result of the disruption.
Sainsbury’s hailed its improved price position against all its main competitors, supported by the growth of its Aldi Price Match scheme to around 800 products and Nectar Prices offer on over 9,000 products. Its premium ‘Taste the Difference’ range saw sales jump 18%, supported by 250 new lines to capitalise on cash-strapped consumers dining more at home.
Sales in its convenience stores grew by 6%, with the unit achieving its highest ever customer satisfaction scores following the rollout of its Aldi Price Match pledge in the channel. Sainsbury’s online grocery operation saw sales increase 6%, reflecting uplifts in both orders and basket size, supported by strong growth in the on-demand channel.
The group also highlighted that it was making good progress with its ‘More for More’ plan to rebalance space in its supermarkets towards food, completing investments in 21 stores in the quarter, with more planned during the year. Additionally, Sainsbury’s opened seven new convenience stores and two new supermarkets in the quarter.
Meanwhile, in its Argos division, total sales climbed 4.4% – a marked improvement from the 1.9% increase in the previous quarter as shoppers sought out paddling pools and fans during the recent warm and sunny weather. The retailer noted that it had achieved a robust sales performance despite a “subdued, highly competitive and deflationary general merchandise market.”
Sainsbury’s stated that it was on track to cut £1bn in costs by March 2027, with savings coming from a shift to self-service tills and SmartShop handsets and overhauls of its management structures and supermarket ranges.
The performance means the group remains on track to hit its annual underlying operating profit forecast of about £1bn, roughly in line with the year just gone. Sainsbury’s stated back in April that it expected its earnings to flatline this year in order to remain competitive after Asda revealed that it was prepared to take a hit to its profits to finance price cuts and recover lost market share.
Chief Executive, Simon Roberts, said today: “Our winning combination of great value, outstanding quality, excellent availability and leading customer service has driven further share gains, reaching our highest market share in almost a decade … We have great momentum, growing faster than the market for three consecutive years, and we are well set to deliver another strong performance over the summer. Boosted by a sunny spring, we’re already off to a great start.”
NAM Implications:
- Sainsbury’s appears to be firing on all cylinders…
- …and even exceeding expectations.
- All of which begs the question of the extent to which individual suppliers have maintained their fair share of sales and investment.
- Maybe time to check your sales increases by category and format vs Sainsbury’s & Argos performance?
