Sainsbury share price rises despite Christmas sales slump

The British supermarket chain saw its sales fall over the holiday period, blaming cutbacks on Black Friday sales and cautious consumers.

Sainsbury Source: Bloomberg

Sainsbury’s has blamed cautious consumers and a reduction in Black Friday discounts over the Christmas period for its dip in third quarter revenues.

In the 15 weeks to January 5, the British supermarket chain saw total retail and grocery sales down 0.4% and like-for-like sales sliding 1.1%, driven down by 2.3% drop in non-food household goods, primarily sold at Argos, the company said in its recent trading statement.

‘Christmas came late this year and I am pleased with the excellent service and availability that we gave customers across the group,’ Sainsbury’s CEO Mike Coupe said. ‘Sainsbury's stores were well set up to deal with customers doing their big Christmas shops later than usual and convenience stores hit a new record on Christmas Eve.’

‘General merchandise sales grew strongly over the key Christmas weeks and outperformed the market over the quarter. Sales declined in the quarter due to cautious customer spending and our decision to reduce promotional activity across Black Friday,’ he added.

Grocery sales increase

Despite a slump in non-food goods and a 0.2% decline in clothing sales, Sainsbury’s grocery sales rose by 0.4% over the period, spurred by the launch of three new supermarkets, a 6% increase in online sales and a 3% uptick in the brand’s convenience stores.

‘Sainsbury's is focused on offering distinctive food at great prices,’ Coupe said. ‘Grocery sales were solid across the quarter and our price position versus our competitors improved, with our £9 turkey crowns and 30p vegetables proving particularly popular.’

‘Groceries online continues to perform well and, including Argos, 20% of the group's sales started online,’ he added.

Sainsbury’s share price rallies

Even with poor sales figures over the Christmas trading period, which is meant to offer retailers a respite, Sainsbury’s share price hasn’t suffered, with it climbing by as much as 2% at lunchtime on Wednesday.

The supermarket admitted that retail markets remain highly competitive, with the consumer outlook remaining unclear, but its CEO contends that Sainsbury’s is ‘well placed to navigate the external environment’ and is focused on delivering its strategy to drive value for its shareholders.

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