Sainsbury’s shares followed Tesco and Marks & Spencer’s playbook on Friday as the supermarket’s shares fell after the release of festive sales figures.
Sainsbury’s has reported reasonable Christmas trading performance, with sales growing 3.8% during the crucial six-week festive period to January 4, 2025. The UK’s second-largest supermarket chain saw particular success in its grocery division, which matched the overall growth rate of 3.8%.
“We have won grocery market share for the fifth consecutive Christmas, with more customers choosing Sainsbury’s for their big shop. Driven by our leading combination of quality, value and service, we have achieved seven consecutive quarters of volume performance ahead of the market and further accelerated our two-year volume growth,” said Simon Roberts, Chief Executive of J Sainsbury plc.
The strong performance was underpinned by record customer satisfaction scores both online and in supermarkets during the Christmas period. The company’s premium Taste the Difference range performed particularly well, with sales growing by 16% in the key Christmas weeks, outpacing both the market and major competitors.
The success was further supported by the expansion of Nectar Prices to over 9,000 products and the introduction of Aldi Price Match in Convenience stores, an industry first that has driven strong customer response.
The disappointment for investors may be that like-for-like sales growth again fell, continuing the trend of quarterly declines in like-for-like sales growth.
General merchandise was a bright spot. The retailer’s general merchandise and clothing segment showed encouraging signs of recovery, posting a 3.4% increase over the Christmas period, despite being relatively flat for the full quarter. Argos, while facing challenges earlier in the quarter, delivered positive results with sales up 10.2% in the six weeks to January 4, or 1.1% when adjusted to include Black Friday trading in both comparative periods.
“Keep in mind that Sainsbury’s is more exposed to general merchandise than its peers through its ownership of Argos,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“General merchandise is the most cyclical area of the supermarket economy to be in, so being overweight in this arena really slows you down when times get tough. Luckily, the festive season helped drive a need for toys and sales picked up slightly in the run-up to Christmas. The overall solid third-quarter performance means full-year profit targets remain on track, with the group expecting growth of around 7% to £1,035mn.”
The retailer has also upgraded its Financial Services profit forecast to around £30 million, up from its previous guidance of £15-25 million.