Sainsbury's festive sales growth held back by Argos

Sainsbury’s said today (8 January) that grocery and clothing sales were up over the important festive trading period, but general merchandise sales were down, meaning total like-for-like revenue declined by 0.7% on the same period one year before.

For the 15 weeks to 4 January 2020, overall grocery sales were up by 0.4% and online grocery revenue jumped by 7.3% year-on-year. Clothing sales increased by 4.4%, but general merchandise sales declined by 3.9%, which Sainsbury’s attributed to a negative toy sales market.

Mike Coupe, CEO of Sainsbury’s, said the retailer had “delivered a standout performance operationally”.

“Our digital investments are also paying off and over 20% of our business was online in the quarter,” he explained.

“Groceries online had record order numbers throughout the Christmas period and customers are increasingly choosing to shop with SmartShop in our supermarkets. Argos had its biggest digital Black Friday to date and record sales through mobile and via Argos click & collect.”

He added that 32 million customers shopped across Sainsbury’s and Argos in the key Christmas week.

In today’s trading statement, Sainsbury’s included some stats showing the changing shape of its business, in terms of how consumers interact with the retailer.

It said that, while the general merchandise market is challenging, Argos delivered its biggest ever digital channel trading day on Black Friday with 12 orders per second in the peak hour.

Sainsbury’s added that 15% of sales, on average, now go through SmartShop in stores where handsets are available, while a record 385,000 customers ordered groceries online in the week before Christmas. Argos’s click & collect grew by nearly 16% and its Fast Track delivery service grew by 3% year on year.

Including Argos, over 20% of sales across the business started online in the quarter, and total online sales grew by over 5% year-on-year.

Meanwhile, some 3.4 million customers have reportedly signed up to Sainsbury’s Nectar app since its launch in October.

Supermarket rival Morrisons announced yesterday that it experienced a 1.7% drop in like-for-like sales for the 22 weeks to January 5, compared to the same period one year before. It did not break out the performance for the specific Christmas period, but the grocery chain described trading conditions throughout the period as challenging with “customer uncertainty” of the last year sustained.