Sainsbury Holiday Sales Meet Estimates on Non-Food Revenueby
Retailer forecasts improvement in second-half results
Clothing and non-food merchandise fueled performance
U.K. grocer J Sainsbury Plc reported third-quarter revenue that met analysts’ estimates as it sold more non-food items such as clothing.
Same-store sales fell 0.4 percent, excluding fuel, in the 15 weeks ended Jan. 9, London-based Sainsbury said in a statement Wednesday. That marked an improvement from the previous quarter’s 1.1 percent decline, and compared with the median analyst estimate for a 0.6 percent drop.
“These are pretty respectable results,” Bryan Roberts, an analyst at consultancy TCC Global, said by phone. “Sainsbury typically outperforms at Christmas because shoppers are willing to spend a little bit extra.”
Sainsbury was the best performing of the U.K.’s mainstream grocers at Christmas, according to Kantar Worldpanel. Shoppers turned to the Taste the Difference range for their holiday luxuries, boosting revenue across the offering by 18 percent. Chief Executive Officer Mike Coupe is still finding growth hard to come by as German budget chains Aldi and Lidl win an ever larger share of spending. The competition has seen the CEO set his sights on acquiring Home Retail Group Plc, whose Argos chain would augment Sainsbury’s non-food business.
Clothing sales rose 6 percent, and general merchandise revenue gained 5 percent, Sainsbury said. The grocer now expects sales in the second half of its financial year to improve upon the 1.6 percent decline it posted in the first half.
The stock fell 1.3 percent to 248 pence as of 8:03 a.m. in London, paring Tuesday’s 3.3 percent gain.
In a presentation on its website, the grocer said that a union with Home Retail would lead to relocating a number of Home Retail’s Argos stores into nearby Sainsbury outlets. Argos already operates concessions in some Sainsbury stores. Sainsbury has until Feb 2 under U.K. takeover rules to announce whether it will make an offer for Home Retail.
Smaller competitor Wm Morrison Supermarkets Plc reported better-than-expected same-store sales growth of 0.2 percent on Tuesday. Market leader Tesco Plc is scheduled to announce holiday sales Thursday.