Sainsbury's sales up as new price war with discounters launched
Sales at Sainsbury’s were better than expected in the last three months with almost a fifth of all food now sold through its website, sharply up on pre-pandemic levels.
The supermarket giant’s latest figures suggest that households appeared to stay at home to eat rather than head off to restaurants and cafes, despite Covid-19 restrictions easing.
In the 16 weeks to June 26, sales were up 1.6 per cent compared with the same period a year ago – which was at the height of the first wave when shelves were stripped bare with panic-buying. City analysts had expected to see a dip in sales.
Sales at Argos took a hit, however – down 3.7 per cent – as the stocking-up on home office equipment a year earlier created tough comparisons.
Online sales were very strong, with 18 per cent of all food now sold through Sainsbury’s website compared with just 8 per cent pre-pandemic.
Chief executive Simon Roberts told investors: “Over the coming months we expect to see customer shopping patterns normalise further and we are well set up to serve them however they want to shop.
“We are focused on offering our customers even better value and regularly creating new and exciting products for them to try.”
He pointed out that the supermarket chain is launching its latest salvo in a price war with discounters Aldi and Lidl, reducing prices by £50 million on everyday products.
The group was also boosted by the rollout of a 60-minute on-demand service, Chop Chop, which is now available in 49 stores, alongside 230 stores offering services on Uber Eats and Deliveroo.
Sainsbury’s saw growth in sales of its Tu clothing range as more shoppers looked to buy outfits to take advantage of easing lockdown restrictions. Clothes sales soared 57.6 per cent compared with a year earlier.
Susannah Streeter, senior investment and markets analyst at financial services group Hargreaves Lansdown, said: “Gaining customer loyalty has been the name of the game for Sainsbury’s and it’s paying off. The company is winning market share, and crucially hanging onto new shoppers who tried out the delivery services for the first time during the pandemic.
“Investment in its online platform continues to pay off with sales up 29 per cent year on year during the quarter and up 142 per cent on a two-year basis.
“The grocery sector is still benefiting from more in-home dining due to ongoing social restrictions and this trend is tailing off as social restrictions are lifting, so the past year will be a tough act to follow for Sainsbury’s. Even so it’s upped its underlying profits forecasts for the full year to £660 million.”
Keith Bowman, equity analyst at Interactive Investor, noted: “A takeover battle for Morrisons now overshadows the food retailing sector. The possible read across for rivals such as Sainsbury’s is evident.
“The grocer’s shares are up by almost 7 per cent since June 18 and prior to any bid for Morrisons.
“As for first-quarter trading at Sainsbury’s, the update is broadly pleasing, with the core outcome a £30m uplift in expected current full-year underlying profit to at least £660m.”