Sainsbury's sales fall over Christmas after Argos slump

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
Updated
LONDON, UNITED KINGDOM - 2020/01/06: A shopper arrives to shop at Sainsbury's supermarket in north London. On Wednesday 8 Jan 2020, J Sainsbury will publish its trading statement up to the end of the third quarter. (Photo by Dinendra Haria/SOPA Images/LightRocket via Getty Images)
A shopper arrives to shop at Sainsbury's supermarket in north London. Photo: Dinendra Haria/SOPA Images/LightRocket via Getty Images

Sainsbury’s (SBRY.L) chief executive has insisted the supermarket group is heading in the right direction, despite a dip in sales over Christmas.

The supermarket, which also owns catalogue retailer Argos, said Wednesday that total sales fell by 0.7% in the 15 weeks to 4 January 2020. The performance was largely driven by a slump in sales at Argos.

Grocery sales at Sainsbury’s were stagnant over Christmas, growing by just 0.4%, although online grocery sales jumped by 7.3% in the period. Clothing sales of Sainsbury’s Tu range rose by 4.4%.

Sales of general merchandise, a proxy for Argos, dropped by 3.9%. Despite the fall, Sainsbury’s chief executive Mike Coupe said Argos “had its biggest digital Black Friday to date and record sales through mobile.”

Shares in Sainsbury’s fell 1.8% at the stock market open in London, before quickly rebounding to tradee up 0.2%. Analysts said the festive trading performance was better than forecast.

Coupe said 32m people visited either Sainsbury’s or Argos during Christmas week and the company “delivered a standout performance operationally.”

“We have a real sense of momentum in Sainsbury's and investment in our stores and improvements to service and availability have led to our highest customer satisfaction scores of the year,” Coupe said in a statement.

READ MORE: 'Unusually challenging' Christmas for supermarkets

Clive Black, a retail analyst at Shore Capital, wrote in a note sent to clients: “Sainsbury has ground out a decent grocery trading performance... in what is clearly a challenging market.”

Bruno Monteyne, a retail analyst at Bernstein, said Sainsbury’s delivered “a strong set of numbers” that were better than expected given market data earlier in the week.

Market research figures from Kantar Worldpanel on Tuesday showed all of the ‘Big Four’ supermarkets lost market share over Christmas, while rival data from Nielsen suggested the supermarket had its toughest festive period since 2014.

Sainsbury’s warned that the market remains “highly competitive and promotional and the consumer outlook continues to be uncertain.” However, the group said it was “well placed to navigate the external environment.”

Black wrote: “The general tone of the statement suggests no change to consensus estimates.”