Sainsbury’s upgraded its annual profit forecast today after becoming the second of the Big Four supermarkets to reveal strong trading figures for the festive period due to increased consumption of food and drink at home during the pandemic.
Across both the Sainsbury’s and Argos chains, the group posted an 8.6% uplift in third-quarter like-for-like sales. Over the nine-week festive period to 2 January, the figure increased to 9.3%.
Earlier this week, Morrisons revealed that its like-for-like sales had risen 9.3% over a three-week Christmas and New Year period, with retail up 8% and wholesale growing 1.3%.
Whilst Sainsbury’s no longer breaks down its like-for-like figures, it revealed that total grocery sales in its third-quarter rose 7.4%. Online grocery sales surged up 128%, continuing a trend seen throughout the pandemic. It delivered 1.1 million orders in the ten days to Christmas, double the number of last year.
Sainsbury’s highlighted that many customers had to change their Christmas plans at the last minute due to the introduction of tighter Covid-19 restrictions, which meant the supermarket sold smaller turkeys and more lamb and beef than normal. However, it appears people still treated themselves, with sales of the retailer’s Taste the Difference up 11% and premium champagne sales surging 52%.
Meanwhile, total general merchandise sales during the quarter were up 6.0%, with 8.4% growth in the Argos division offsetting a 5.4% decline in the Sainsbury’s supermarkets.
The group said grocery, general merchandise and clothing sales had been stronger than it had expected, particularly during England’s second national lockdown in November and subsequently increased restrictions throughout the UK. It also highlighted that general merchandise and clothing margins had benefited from better than anticipated full-price sales, driven by customers shopping earlier for Christmas and a change to its Black Friday trading strategy.
Sainsbury’s stated that the impact of the pandemic on sales, staff and costs meant its financial outlook for the remainder of the year remained uncertain. However, after forgoing business rates relief of £410m, it now expects to report underlying profit before tax of at least £330m in its full-year to March 2021.
That is above a forecast made last month of at least £270m, although it is still down from the £586m it made in the previous year.
Sainsbury’s Chief Executive Simon Roberts said of the performance: “We made a strong start to delivering our Food First plan and we are also clear on the opportunities to further improve our offer as we look ahead for 2021.
“At Christmas we focused on offering our customers great prices, great quality and great service and I feel really proud that Sainsbury’s customer satisfaction scores were the highest ever in the key Christmas week.
“We have started the new year with a strong value offer, with Price Lock currently on over 2,500 everyday products.”
Sainsbury’s was the biggest riser on the FTSE 100 this morning following the results announcement, with its shares gaining more than 5% in early trading.
John Moore, investment manager at Brewin Dolphin, said: “Sainsbury’s appears well placed given the self-help measures it has taken and investment the company continues to administer to its core business and wider offering, which remains open and highly relevant to consumers in the present circumstances.”
NAM Implications:
- As with other mults, it was a very good year..(hopefully echoed in your sales).
- Consumers having a final celebration before the ‘hangover’ of 2021…
- Key to keep in mind the emergence of the super-savvy consumer…
- …unwilling to settle for anything less than demonstrable value for money.
