Sainsbury posts ‘record’ sales due to differentiated food offer
Grocery sales for the retailer grew 2.3% for the 15 weeks to January 6 this year. Excluding fuel, Sainsbury’s total retail sales rose by 1.2% and like-for-like sales up 1.1%.
The supermarket chain expected to achieve earnings before interest, taxes, depreciation and amortisation (EBITDA) of between £80M and £85M in its full-year results.
The UK’s second biggest supermarket said it had boosted sales by differentiating its food offer and creating distinctive food ranges.
Sainsbury launched 185 new food lines over Christmas, with almost half belonging to its premium Taste the Difference range.
185 new food lines over Christmas
What the analyst said
Commenting on Sainsbury’s results, City Index senior market analyst Fiona Cincotta said: “While the 1.1% increase isn't as strong as the 2.8% posted by Morrisons yesterday, it's a welcome improvement on the 0.6% growth recorded in the second quarter and higher than what many analysts were anticipating.”
It also saw success from its line of key Christmas vegetables, available for 25p, and some of the lowest turkey prices available on the market, it claimed.
Mike Coupe, group ceo, said: “We had a strong Christmas week, with record sales, over 340,000 online grocery orders and stellar growth in Argos Fast Track delivery and collection. Online accounted for 20% of the group’s sales during the quarter.”
Online sales for the company rose by 8.2%, while convenience sales grew 7.3%.
“Friday December 22 was our biggest sales day for stores and we also delivered an online grocery order to customers every second,” Coupe added.
He also predicted that the rate of food inflation would slow down over the coming year.
Rate of food inflation
Speaking to BBC News, he said: “We've done everything we can as a business to mitigate that, but we can’t get away from the fact that food prices are going up.
“But with that effect wearing off, food price inflation should gradually reduce over the next six to nine months.”
Martin Lane of market analyst Money.co.uk said that while Sainsbury had experienced a good Christmas, the retailer should not rest on its laurels.
“Pressure is mounting from their German competitors Lidl, who had their best Christmas trading period ever. To compete with their bargain goods, Sainsbury has been cutting prices and their margins to protect shoppers from rising inflation,” said Lane.
Meanwhile, Morrisons has posted strong sales over the Christmas period, despite rising ingredients costs.
Sainsbury’s third quarter results – at a glance
- Excluding fuel, total retail sales up 1.2% and like-for-like sales up 1.1%
- Grocery sales grew 2.3% with Groceries Online and Convenience up 8.2% and 7.3% respectively
- Predicted EBITDA for the full year of between £80M–£85M
