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Sainsbury's online sales jump 7.3% in Q1, total sales flat

Sainsbury’s CEO Mike Coupe said he was pleased with the grocer’s progress in its first quarter as total sales edged up by 0.8% year on year – driven by strong growth of 7.3% in the retailer’s online grocery business.

On a like-for-like basis, sales excluding fuel were up 0.2% on the same period last year.

General merchandise sales grew by 1.7% and clothing sales inched up by 0.8%, which Sainsbury’s said represented an outperformance of the market.

“The headline numbers reflect the level of price reductions we have made in key areas like fresh meat, fruit and vegetables since March,” explained Coupe.

“Our price position has improved and customers have responded well, resulting in a continuation of the improved volume trend we saw in the second half of last financial year.”

He added: "General merchandise and clothing, including Argos, continue to outperform a very challenging market and we are well placed to further grow market share. Argos stores in Sainsbury's supermarkets continue to grow, Fast Track sales were strong and we have now launched Tu clothing on the Argos website, a key strategic milestone.”

Argos online sales, including mobile sales, grew by 12%, while Fast Track collection jumped by 21% and Fast Track delivery increased by 20% year on year.

During the quarter, Sainsbury’s opened 37 Argos stores in its supermarkets, bringing the total to 228. The retailer said 18 of the 37 stores replaced an existing Argos store, taking the total number of replacement stores to 84.

The grocer added that Argos stores in Sainsbury's supermarkets have grown sales by an average of 15% in their second year of trading, and it expects to open around 90 Argos stores in Sainsbury's supermarkets in the 2018-19 financial year, which will take the total to around 280.

There are now 174 collection points in supermarkets, including 37 in convenience stores, where customers can collect Argos, DPD, eBay and Tu clothing orders.

Sainsbury’s said it expects to deliver £160 million of EBITDA synergies from the Argos acquisition by March 2019.

On the proposed Asda acquisition, Coupe commented: "We have the right strategy in place and our proposal to combine Sainsbury's and Asda will create a dynamic new player in UK retail, with the scale to give customers more of what they want today and create a more resilient and adaptable business for the future.

“We have successfully agreed a financing package of £3.5 billion in relation to the proposed combination. The financing has been raised on attractive terms, reflecting the confidence of the lending banks in the outlook for the proposed combined business."

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