wnol.info July 22 2018

General merchandise warning overshadows Sainsbury's Christmas sales beat

July 22 2018, 11:46 | Alonzo Simpson

General merchandise warning overshadows Sainsbury's Christmas sales beat

General merchandise warning overshadows Sainsbury's Christmas sales beat

J Sainsbury plc (LON:SBRY) has upgraded its full-year profit guidance on the back of record sales in the week leading up to Christmas.

With Britons under pressure from slow wage growth compounded by higher inflation, company updates and survey data this month show they cut back on nearly everything other than food purchases in the run-up to Christmas.

The supermarket giant on Wednesday said that, excluding fuel, total sales in the 15 weeks to 6 January had risen by 1.2 per cent compared to the equivalent period in the previous year.

United Kingdom grocer Sainsbury's says it has experienced a record week of trading during the Christmas period with "excellent" operations across the whole group.

FTSE 100-listed Sainsbury's said it now expects underlying pretax profit for the year ending on March 11 to be "moderately ahead" of consensus, which currently gives a figure of GBP559.0 million.

Sainsbury's did not break down the separate like-for-like sales performances of its supermarket and Argos businesses.

While third quarter sales in General Merchandise dipped 1.4% and Clothing growth slowed from 6.3% in Q2 to just 1%, both are said to have outperformed their markets.

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The weaker performance is Argos is in stark contrast to past year when the catalogue retailer turbo-charged the group's Christmas sales with revenue growth of 3.7%.

Total revenue rose 1.2 per cent in the period, with grocery sales growing 2.3 per cent. Sainsbury's opened 52 Argos stores inside supermarkets during the period, bringing the current total to 164.

The positive trading update comes a day after Kantar Worldpanel said Sainsbury's market share had dropped to 16.4% from 16.7%. Online accounted for a fifth of the group's sales during the quarter.

"We have to acknowledge the fact that the (non-food) market is challenging and there's certainly a little bit of a squeeze on consumer disposable income and where people are able to defer purchases they do", Chief Executive Mike Coupe told reporters.

The supermarket's Taste the Difference range performed particularly well, with customers buying more food from the premium range than previous year.

"The Argos business really sets us up for our future, because one of the big stories of this Christmas is how much more growth has been online and as we see here today something like 20 percent of Sainsbury's sales are now online, a big part of that is Argos", he added.

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