Sainsbury’s is to make £60m more in annual profits than predicted after enjoying better than expected food and drink sales over Christmas as shoppers bought more champagne than ever before.
The UK’s second biggest supermarket said grocery sales rose 0.8% in the six weeks to 8 January, excluding Boxing Day, when it chose to close this year, as more people dined at home as the Omicron wave of Covid-19 put a dampener on trips to restaurants and pubs.
Total sales slipped 2.4% over that period as the company said problems with the supply of technology, gaming kit and toys hit trading at the group’s Argos chain but Sainsbury’s said profit margins on non-food had improved as it had cut down on discounting. Online grocery sales were down 15% year on year but still almost double pre-pandemic levels.
Sainsbury’s said it now expected to make underlying profits of £720m for the year to 8 January, up from £660m, with profit expectations boosted by the better than hoped for grocery sales, improved profit margins on non-food and lower than feared bad debts at its banking arm.
Simon Roberts, the chief executive of Sainsbury’s, said: “I am really pleased with how we delivered for customers this Christmas. More people ate at home and our significant investment in value, innovation and service led to market share growth.”
Sainsbury’s said it had seen its biggest ever sales of champagne, contributing to its best ever new year trade, while there was a surge in demand for last-minute online orders from Argos.
The late surge came at the end of a tricky quarter in which sales at established stores were down 4.5%. Sales at Argos were down 16% in the three months to 8 January and clothing down almost 3% but Sainsbury’s said this was partly the result of a reduction in unprofitable discounting. It said full-price clothing sales rose 38%.