The core retail business at Sainsbury’s stumbled again at the start of this year, but the successful integration of Argos after its £1.4bn acquisition last year helped it to boost sales overall.
In a trading update for the nine weeks to March 11, Sainsbury’s said like-for-like retail sales were 0.5 per cent lower than the same period last year, after having briefly returned to growth over a better than expected Christmas period. Total retail sales excluding fuel inched up 0.1 per cent.
However, combined Sainsbury’s and Argos like-for-like sales climbed 0.3 per cent, driven by a 4.3 per cent increase at Argos. The company said it now has 41 Argos digital stores inside Sainsbury’s supermarkets, and has also improved its website and app.
Intense competition has weighed on UK supermarkets’ margins in recent years, but recent surveys by Kantar Worldpanel have shown sales growth increasing since the start of the year as inflation rises.
Analysts at Deutsche Bank have predicted a sharp acceleration in market growth this year, with Sainsbury’s set to be one of the biggest beneficiaries. Shares in the group have risen 8.9 per cent so far this year, well ahead of the wider FTSE 100.
Mike Coupe, Sainsbury’s chief executive, said:
We are pleased with this performance and are making good progress against our key priorities. Customers appreciate the quality, choice and value of our differentiated food offer, and our Tu clothing brand again performed ahead of the market, with sales up five per cent.
The market remains very competitive and the impact of cost price pressures remains uncertain. However, we are well placed to navigate the external environment and remain focused on delivering our strategy.