Online sales at Sainsbury’s over Christmas saw an impressive 7.3% growth in 2019, however, poor sales of toys and games at Argos dragged down overall results for the peak season, with the group seeing non-fuel sales drop 0.7%.
Overall grocery sales were also sluggish at 0.4%, while colder weather gave clothing a 4.4% boost. However, consumers were more cautious in spending across general merchandise as the highly uncertain economic and political environment continue to take their toll.
Commenting on the results, Mike Coupe, Chief Executive of J Sainsbury plc, says: “We gave our customers a great combination of quality food at good prices this Christmas and we delivered a standout performance operationally. We have a real sense of momentum in Sainsbury’s and investment in our stores and improvements to service and availability have led to our highest customer satisfaction scores of the year.”
He continues: “Our digital investments are also paying off and over 20% of our business was online in the quarter. Groceries Online had record order numbers throughout the Christmas period and customers are increasingly choosing to shop with SmartShop in our supermarkets. Argos had its biggest digital Black Friday to date and record sales through mobile and via Argos Click and Collect. 32 million customers shopped with us across Sainsbury’s and Argos in the key Christmas week.”
Helal Miah, Investment Research Analyst at The Share Centre, adds: “To a certain extent Sainsbury’s reasonably good trading update this morning was anticipated given relatively better performances over recent quarters compared to peers and yesterday’s Kantar update. Mike Coupe’s comments surrounding the results were fairly upbeat and rhetoric around a sense of momentum and transition should be taken as encouraging for investors. There certainly does seem to be some momentum in Sainsbury’s transition which could well be partly as a result of better focus after the failed Asda merger.”
He continues: “However, this does not mean investors should be piling in to buy the shares despite the good dividend yields. We still remain cautious overall on the sector, competition will remain intense as the German discounters pile on the pressure and margins will never return to historic levels.”