Sainsbury’s today reports falling online sales as shoppers return to pre-pandemic buying habits. While first-half online grocery sales were 17.4% lower than last year, the grocer says more of the customers who have bought from it online are now returning to its stores, compared to its competitors – helping it to gain market share. Supermarket sales grew by 2.9% and convenience store sales by 10.5% over the same period.
That said, first-half online sales were 88.5% higher than they were in the same period in pre-pandemic 2019, and Sainsbury’s delivered about 118,000 on demand grocery orders in as little as 30 minutes a week, from almost 700 stores, through its own Chop Chop service as well as partnerships with Deliveroo and Uber Eats. It says its online productivity metrics have improved, with a 13% boost to its hourly pick rate and a 9% improvement to its hourly deliveries.
More than 10m customers are now registered with its Nectar loyalty app – with the scheme now used in more than 30% of Argos sales. Use of Sainsbury’s in-store SmartShop programme, which offers personalised My Nectar Prices to customers who scan their own shopping, is also increasing.
Group revenue came in at £16.4m in the 28 weeks to September 17, 4.4% up on the same time last year. Excluding fuel sales, group retail sales of £14.7m were 1.3% down on last time. Grocery sales were 0.2% ahead of last time, in total, while general merchandise sales were 6.1% behind, with falls across Sainsbury’s general merchandise (-9.1%), Argos (-5.5%) and in clothing (-6%).
Pre-tax profits of £376m were 29% down on the £527m reported last year. This, said Sainsbury’s, reflected legal settlements in its favour in the previous year. Before that one-off income, underlying pre-tax profits of £340m were 8% down on the previous year – and 43% ahead of the same period in 2019.
Looking ahead, the supermarket expects to make underlying pre-tax profits of between £630m and £690m in its current financial year.
Sainsbury’s says it has invested more than £500m over two years to keep its price rises lower than inflation. It has given staff a second pay rise this year, in the light of the rising cost of living.
When compared to the same period in pre-pandemic 2019, grocery sales were 9.3.% ahead, but general merchandise sales were 5% down, with Sainsbury’s general merchandise 14.5% behind, and Argos 2.9% behind.
Simon Roberts, chief executive of Sainsbury’s, says: “Two years ago we launched our plan to put food back at the heart of Sainsbury’s. We committed to improve shareholder returns by creating a simpler business and reducing costs to invest in lower prices, food innovation and maintaining colleague and customer satisfaction.
“We have grown market share in both grocery and general merchandise and investment in our stores and colleagues is supporting leading supermarket customer satisfaction and availability. Profits are significantly higher than pre-Covid levels and we are generating strong cash flow, supporting debt reduction and dividend payments.”
He adds: “Over the past year and a half we have consistently passed on less price inflation than our competitors and I am confident we have never been better value. Argos is also performing well in a market where customers are looking for reassurance that they are getting great value and availability. “
Sainsbury’s says its Argos transformation programme is on track, wit profitability “significantly” ahead of pre-pandemic levels. It now has 414 Argos stores in branches of Sainsbury’s supermarkets, support by 11 local fulfilment centres. It expects to close about 50 standalone Argos shops this year and open 25 stores in branches of Sainbury’s. By March 2024 it now expects to have about 160 Argos standalone shops and up to 460 branches inside Sainsbury’s, as well as up to 500 collection points. The transformation programme, says Sainsbury’s, has improved profitability at the general merchandise retailer.
Sainsbury’s says it has cut greenhouse gas emissions in its own operations by 44.5% year-on-year, taking it nearer to its target of being net zero by 2035.
Sainsbury’s is ranked Elite in RXUK Top500 research.