Sainsbury's shares hit by poor Christmas sales
While grocery volume growth continued to drive a market outperformance at Sainsbury’s over rivals, traders have taken the stock down on poor merchandise sales.
Sainsbury’s says more customers are doing more of their grocery shopping at the supermarket, with an outperformance against the market every week of the last financial year, delivering volume growth ahead of the market for a fourth consecutive Christmas. While Q3 grocery sales were up 9.3%, general merchandise sales in the same period were down 0.6%. with Christmas merchandise sales down 3.7% and Christmas clothing sales down 6.0%.
(AI Video Summary)
Robust grocery sales against poor general merchandise sales
Sainsbury's, a popular supermarket, recently announced how well it did in the last few months. It had great sales in the grocery department, but not so great in other areas. Because of this, the value of its stock went down. People are still choosing to buy their groceries at Sainsbury's because they had more customers than other stores. In the last quarter, their grocery sales went up by 9.3%, and during Christmas, it went up by 8.6%. However, their clothing section didn't do as well and went down by 1.7%. During Christmas, clothing sales dropped by 6%.
Share price drops after sales numbers revealed
Even though the company is still making a good profit, people were more focused on the bad news about the drop in sales of other products, rather than the good news about grocery sales. In the days leading up to the announcement, the value of the stock went up to its highest level since August 2021. But after the announcement, it dropped almost 5% to 291.3 pence. The decrease was mainly because the general merchandise didn't do too well, with a 0.6% decrease. The fact that they closed Argos in Ireland also had a bad impact on their overall performance.
People who trade stocks reacted to this news by selling their shares in Sainsbury's. They believed that the company's performance in the other products area was not good enough, so they wanted to get rid of their shares. As a result, the stock's value went down significantly to 291 pence per share, which is nearly 5% lower than before.
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