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- Sainsbury’s saw food sales rise in the quarter, but Argos sales fell
Sainsbury’s saw sales of its Argos brand fall in its first quarter, while sales of clothing and general merchandise also faltered, results this morning showed.
The supermarket giant said sales of general merchandise and clothing fell 4.3 percent, while Argos sales fell 6.2 percent, amid poor weather in early summer and strong sales over the same period last year.
However, the group’s food sales rose 4.8 percent in the period and the supermarket group’s underlying total sales rose 3 percent.
Food sales: Sainsbury’s food sales rose 4.8% in its latest first quarter
Comparable sales, excluding fuel, rose 2.7 percent, compared with a 9.8 percent increase in the same period a year earlier.
Sainsbury’s said it still expected full-year 2024/25 underlying retail operating profit of between £1.01bn and £1.06bn, representing growth of 5 to 10 per cent.
For the year, retail free cash flow is forecast to be ‘at least’ £500m, down from £639m previously.
Sainsbury’s shares fell 3.99 percent or 10.28 pence to 247.52 pence in early trading and have fallen more than 9 percent over the past year.
Victoria Scholar, investment director at Interactive Investor, said: ‘Argos is struggling in a weak demand environment, given that its offering is not a priority for cash-strapped consumers at the moment.
The Sainsbury’s boss even said that consumers remain cautious when it comes to discretionary spending.
‘The garden and home are also suffering amid disappointingly wet weather and the post-pandemic DIY boom era.’
But the group said it achieved the biggest market share gains of any supermarket during the period, with consistent net gains from customer switching, according to Kantar Worldpanel data.
Responsible: Simon Roberts is the chief executive of Sainsbury’s
Simon Roberts, chief executive, said: “We are pleased with our outperformance in the grocery sector and the initial progress we are making towards our next-level plan at Sainsbury’s.”
He added: “We are totally focused on providing the best combination of value and quality on the market and our customers recognise this with 98 per cent of large baskets including Nectar Prices or Aldi Price Match.”
The chain said it launched 400 new food products in the quarter, with half of those for its Taste the Difference range.
Roberts said: “Our food business is going from strength to strength and I would like to thank all my colleagues, our suppliers and farmers for the excellent work they do every day to meet the needs of all our customers.”
NatWest is to buy Sainsbury’s core banking business as the supermarket group pulls out of the sector to focus on food.
The supermarket giant will pay NatWest £125m upon completion of the deal, which will see the lender acquire £1.4bn of unsecured personal loans, £1.1bn of credit card balances and approximately £2.6bn of customer deposits.
NatWest will assume Sainsbury’s core banking assets and liabilities, although final consideration will be confirmed when the deal is expected to be completed in March next year.
Sainsbury’s said there would be no immediate changes to its banking customers’ terms and conditions, adding that it “does not need to take any action”.
Chris Beckett, head of equity research at Quilter Cheviot, said: “While Sainsbury’s has demonstrated some positive trends, particularly in grocery, the overall thesis remains that in food retailing, larger companies are generally better placed to reap the benefits due to economies of scale, so we prefer Tesco.”
An academic at Interactive Investor said: ‘Investors have had a tough time with the shares, which are down around 16 per cent so far this year, compared with Tesco’s, which is up more than 4 per cent.
‘And they haven’t been thrilled with the grocer’s mixed performance today, with shares down around 4 percent.
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