Sainsbury's claims food win but reveals tougher Christmas for wider sales

Sainsbury’s says its first Nectar Prices Christmas helped it to achieve volume growth ahead of the grocery market over the festive season but sales were not up across the board.

The UK’s second-largest supermarket chain by market share reported a 9.3% rise in grocery sales over the 16 weeks to 6 January.

It stated that stronger volume growth – the number of products sold – offset lower inflation, with customers also trading up to its Taste the Difference range.

But the company, which also owns Argos, said sales of Christmas general merchandise were down on last year, with clothing sales down 1.7% over the period.

Christmas clothing sales fell 6%.

As a result, Sainsbury’s maintained its profit guidance for the financial year.

The company said it was expecting to report underlying profit before tax of between £670m and £700m.

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Its figures chime with industry data suggesting a strong Christmas for grocery but cost of living pressures continuing to hit demand for many other goods.

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Separate figures released by the British Retail Consortium and Barclays on Tuesday showed spending rose below the rate of inflation in the economy.

Lidl and M&S appear to have been the main winners among food stores in terms of market share.

Greggs, the bakery chain-turned food-on-the-go operator, also claimed a win on Wednesday.

It said that demand for seasonal products such as its Festive Bake, Christmas lunch baguette and hot drinks helped deliver a better-than-expected 9.4% rise in like-for-like sales during the fourth quarter of 2023.

Its trading update also suggested that inflationary pressures in the business were easing.

Sainsbury’s profit outlook meant the company was on course to record broadly similar earnings to the £690m achieved in its last financial year.

It recently announced a £200m investment in pay rises for its staff.

Chief executive Simon Roberts told investors he would share a strategy update next month.

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“We’ve worked hard to really deliver for our customers this quarter and have grown grocery volumes ahead of the market for the fourth Christmas in a row,” he said in a statement.

“More customers are choosing to shop at Sainsbury’s, recognising our determined focus on value, product innovation and service.

“This was our first Christmas powered by Nectar Prices, helping customers save an average of £16 on an £80 Christmas shop.

“We delivered our best ever value Christmas roast and customers bought record numbers of pigs in blankets, mince pies and sparkling wine. Taste the Difference sales grew ahead of the market as families treated themselves.

“Across the quarter, Argos performed ahead of competitors in a highly promotional market. Argos delivered a strong Black Friday performance but a weaker Christmas against an exceptional performance last year.”

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