Sainsbury’s posted a solid first quarter, with total retail sales (excluding fuel) up 2.7% to £9.15 billion for the 16 weeks to 20 June, as the supermarket continued to take market share despite tough comparatives against last year.
Grocery was the standout, climbing 3.6% to £7.6 billion, with like-for-like sales up 2.1%.
Fresh food led the charge, up 5% year-on-year, with record-breaking berry and burger sales during the May heatwave and the best-ever Easter for lamb. Taste the Difference also continued its strong run, up 6%, while Groceries Online sales jumped 12.5%.
It wasn’t all rosy elsewhere. General Merchandise fell 6.3% as Sainsbury’s deliberately shrinks that space in favour of food, and Tu Clothing dipped 2.1%, though that was said to be ahead of a weak wider market.
Argos sales slipped 0.5% to £1.1 billion. Volumes were actually up 2.2%, but lower average selling prices and cautious consumer spending dragged the headline figure down. Fans sold well during the heatwave and big-screen TVs ahead of the World Cup gave Argos a lift.
“Sainsbury’s is finding life a little harder as first quarter sales growth slows. It reported 2.1% like-for-like sales growth versus 4.7% in last year’s comparative period,” said Dan Coatsworth, head of markets at AJ Bell.
“It’s not disastrous and the grocer is still striking a chord with both cost-conscious individuals and shoppers happy to spend a bit more on fancy items. Online grocery sales were notably strong, and Sainsbury’s continues to find ways to improve the in-store shopping experience.”
Value remained the central theme. Sainsbury’s kept the biggest Aldi Price Match in the market and ran Nectar Prices across roughly 11,000 products, with shoppers saving an average of £16-plus on an £80 weekly shop. Nearly a million more customers are now regularly using digital Nectar.
Sainsbury’s left its full-year guidance unchanged, still targeting underlying operating profit of £975 million to £1.075 billion and retail free cash flow above £500 million.
The firm made the seemingly mandatory warning about the Middle East, but investors generally happy with the update and Sainsbury’s shares added 2% on Tuesday.