Sainsbury’s delivers ‘truly woeful’ Christmas results as Argos flops with the supermarket blaming cautious consumers for its troubles
- Sainsbury’s like-for-like sales slipped 1.1% in the 15 weeks to January 5
- A 0.4% rise in grocery sales was offset by a 2.3% slump in general merchandise
- Boss Mike Coupe said ‘Christmas came late this year’
- The results come as planned merger with Asda hangs in the balance
Sainsbury’s stock slid into the red today after the UK’s second biggest supermarket posted what an analyst has called ‘a truly woeful set of numbers’ for the all-important ‘Golden Quarter’.
The group’s same-store sales fell by 1.1 per cent in the last 15 weeks, steeper than the 0.3 per cent decline the City was expecting.
A 0.4 per cent uplift in grocery sales was overshadowed by a 2.3 per cent slump in general merchandise, which includes Argos, with the group claiming that shoppers were more cautious about how they spent their money this Christmas.
Sainsbury’s group same-store sales fell by 1.1 per cent in the last 15 weeks, driven by Argos
Sainsbury’s, which bought Argos over two years ago, said customers held back on toys and electricals, and were trading down to cheaper food products too amid a ‘cautious’ consumer backdrop.
The group also said sales were hampered by a decision to swerve heavy discounting, even over Black Friday.
Its Tu clothing sales slipped 0.2 per cent, which Sainsbury’s boss Mike Coupe said was a strong performance in a ‘tough market’.
The chief executive added: ‘Retail markets are highly competitive and very promotional, and the consumer outlook continues to be uncertain.’
He noted that ‘Christmas came very late,’ this time around, with shoppers leaving it to the last minute and doing bigger shops than before.
‘Santa didn’t stop for woeful Sainsbury’s,’ said Markets.com analyst Neil Wilson.
‘This was a truly woeful set of numbers. Customers are cautious but Sainsbury’s should be doing better. At a time of gently rising inflation and improving real wages Sainsbury’s ought to be enjoying growth in group sales,’ he said.
Sainsbury’s rocked the grocery sector earlier this year when it unveiled plans for a merger with its big four rival Asda. The £13billion deal, which would create a supermarket giant bigger than Tesco, is currency pending clearance from the competition watchdog.
Analysts claimed that management have ‘taken their eye off the basis’ but CEO Mike Coupe (above) strongly refuted this
Wilson suggested that the Argos acquisition and pending Adsa merger had caused management to ‘take its eye off the basics’ – a claim that Coupe strongly refuted on a later call with journalists.
Coupe did not comment further on the Adsa deal, other than to say he remains confident about its ability to lower prices for customers.
Industry data on Tuesday from Kantar Worldpanel said the chain’s market share shrunk to 16.2 per cent over the Golden Quarter, down from 16.5 per cent a year earlier.
The sales fall stands in contrast to the 3.6 per cent rise reported by rival Morrisons on Tuesday earlier this week, but the lion’s share of this came its fast-growing wholesale business and just 0.6 per cent from food.
Meanwhile, insurgent Aldi boasted that it had its best Christmas in the UK ever, generating nearly £1billion in sales.
Wilson said: ‘Overall, clearly the discounters Aldi and Lidl are having a big impact, but with the exception of a mega tie-up with Asda it’s hard to see what Sainsbury’s is doing to combat them effectively.’
According to Richard Hunter, head of markets at Interactive Investor, Sainsbury results are ‘less punchy than expected’, but ‘all is not lost’.
He said: ‘The increasingly important channels of online and convenience continue to post strong sales growth of 6 per cent and 3 per cent respectively, whilst the group’s planned cost savings of £200million remain on track.’
Boss Mike Coupe said he noticed that shoppers traded down for cheaper items over Christmas
Sainsbury’s shares slipped 1.13 per cent in early trading to 263.5p.
Its stock is edging back towards where it was a year ago, before it was boosted by news of the Asda merger.
‘With the deal yet to go through and conditions remaining challenging, the market consensus of the shares as a hold is likely to remain intact for the time being,’ Hunter said.
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