the times | Thursday January 13 2022 2GM 45
Sainsbury’s can taste
the difference with
bumper food sales
Sainbury’s has raised its forecast for
full-year profits after bumper food and
drink sales over Christmas and a record
new year performance.
Britain’s second biggest supermarket
cashed in as, according to Barclaycard,
spending in restaurants fell by more
than 14 per cent in December com-
pared with the same month in 2019.
Food sales at Sainbury’s between the
end of November and January 8 were
up by 0.1 per cent on the same period of
2020, despite last year benefiting from
the stay-at-home order issued to many
areas in the run-up to Christmas.
Simon Roberts, the grocer’s chief
executive, said that more people had
eaten at home and had “treated” them-
selves, helping the supermarket chain
to increase its market share. He added
that Sainsbury’s had enjoyed its “big-
gest ever new year”.
However, total sales over that six-
week period, excluding fuel, were down
2.9 per cent year-on-year, reflecting a
weaker performance at the group’s
Argos subsidiary after an “exceptional”
showing during Christmas 2020.
In the 16 weeks to January 8, its third
quarter, sales fell by 5.3 per cent. The
City had expected that sales would
struggle to match last year’s perform-
ance, but analysts had pencilled in a
decline of only about 3 per cent.
Sainsbury’s still gave the market the
profit upgrade that it had been wanting.
Strong grocery sales, coupled with cost
savings and fewer bad debts in its bank
division, meant that profits for its
present financial year, which runs until
the end of March, would be at least
£720 million, it said, about £60 million
more than previous guidance.
Sainsbury’s has just over 15 per cent
of the UK grocery market. It employs
180,000 people and has 1,411 stores. As
well as the supermarkets, Sainsbury’s
owns Argos, which it bought for £1.2 bil-lion in 2016. It has closed high street
Argos stores and incorporated the busi-
ness into its supermarkets. The City
expects full-year sales of food, clothes
and other goods of about £29 billion.
Shares in Sainsbury’s rose by 8¾p, or
3.1 per cent, to 288p, valuing the busi-
ness at nearly £7 billion.
Sainsbury’s Taste the Difference line,
including new additions such as its
Belgian chocolate and salted caramel
star, was its fastest-growing product
tier.
The launch of its Aldi price match
campaign, which included its “lowest
ever priced Christmas dinner”, helped it
to increase market share.
General merchandise sales, which
include Argos’s contribution, were
down 16 per cent in the third quarter,
which James Grzinic, a retail analyst at
Jefferies, described as “very weak”.
That was partly to do with strong
comparatives from the previous year,
but Sainsbury’s noted that there had
been “limited availability in key pro-
duct areas” as the supply chain troubles
that most businesses have been suffer-
ing persists. Bosses also brought in
fewer promotions and markdowns in
order to “focus on profitable sales”.
Profits at Sainsbury’s Bank were
“running ahead of consensus”, the com-
pany said. Fewer people defaulting on
loans means that bad debts were “lower
than expected”, while lending volumes
were “starting to recover”.
6 Annual profits at Dunelm are
expected to rise £30 million more than
thought, at £210 million, after a surge in
sofa-buying. Sales rose by 13 per cent
year-on-year to £407 million between
October and December, the homeware
retailer’s second quarter, taking its half-
year sales to £796 million, 11 per cent up
on the year. The company pointed to a
“very strong performance in furniture”,
with sofas and chairs proving popular.
The bullish update sent Dunelm shares
up 69p, or 5.1 per cent, to £14.09.Tom Howard
Behind the storyI
f there was ever going to be
a test of Simon Roberts’
food-first strategy,
Christmas was it (Ashley
Armstrong writes). With
supply chain challenges and
microchip shortages consigning
Argos sales to the doldrums,
Sainsbury’s needed to
turbocharge its grocery sales.
Despite all the uncertainties,
the supermarket “bought big and
planned big”, according to
Roberts, who hired 22,000 extra
workers amid concerns that staff
shortages would leave gaps on its
shelves. The result was a better
food sales performance than had
been expected.
There’s no escaping the fact
that Argos’s third-quarter sales
were disappointing, down 16 per
cent year-on-year, but Roberts’s
decision to shut its high street
stores in favour of Sainsbury’s
concessions means it is less
alarming than if Sainsbury’s was
still bearing the cost of rent and
rates for hundreds of sites.
Omicron concerns meant that
more people celebrated at home
rather than risk catching the
virus at bars and restaurants,
resulting in Sainsbury’s growing
its upmarket Taste the Difference
range by 13 per cent and record
sales of champagne. Its Aldi
Price Match promotion the week
before Christmas led to a 23 per
cent rise in the sales of festive
items such as vegetables, turkey
and smoked salmon. More
importantly, Roberts managed to
cast off Sainsbury’s pricey image
and encouraged more customers
to do a bigger shop.inflation presented a
looming threat, in
previous recessions the
retailer had been
relatively resilient. “The
living wage is going up,
which adds cost to us,
but also is an equal
opportunity because a
lot of our customers are
on the living wage,” he
said.
JD Sports said last
year that it was
considering splitting
Cowgill’s executive
chairman role to
alleviate growing
corporate governance
concerns. Yesterday
Cowgill commented:
“We are making
progress with that and
hopefully it will be
announced before the
AGM.” The annual
meeting is in May and it
is widely thought that a
successor will be an
internal appointment.JD Sports, which
sponsors boxing
events, doubled its
profits guidance,
helped by strong
sportswear salesCONOR MOLLOY/ACTION PLUS/GETTY IMAGESBusiness