Sainsbury’s raises profit forecast after a record Christmas

SAINSBURY’S, which has 13 stores in Northern Ireland, has upgraded its full-year profit forecast following a record Christmas, but the supermarket giant warned of a challenging market amid weaker sales at Argos.

The supermarket giant revealed a 1.1% rise in like-for-like sales over the 15 weeks to January 6, helped by solid trade over the Christmas week.

Total revenue rose 1.2% in the period, with grocery sales growing by 2.3%.

The grocery chain said its 25p vegetable lines proved particularly popular, underlining how consumers are seeking the lowest prices amid soaring, Brexit-fuelled inflation.

But Sainsbury’s also flagged that sales at its general merchan- dise arm, which includes Argos, fell 1.4%, adding it is cautious about challenging market conditions and the consumer environment. It now owns 26 Argos stores in Northern Ireland.

Boss Mike Coupe said: “We have to be cautious because that’s a reflection of the consumer environment.

“We live in uncertain times and we will adapt our business accordingly.”

Nevertheless, Sainsbury’s said it expects underlying profit to be “moderately ahead” of the £559m consensus after signalling bigger cost savings from the integration of Argos, which it acquired in 2016.

The supermarket is expecting an extra £20m in cost savings, or “synergies”.

Shares nudged up nearly 2% in morning trading to 253p.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Sainsbury’s put in a solid performance in the last quarter of the year, despite its exposure to the fast-shrinking general merchandise market.

“Consumers are spending less on discretionary items thanks to stagnant wages and rising inflation.

“Consequently, general merchandise sales are going backwards at Sainsbury’s, though not as fast as they are in the market at large, and if the supermarket can maintain that market share when consumers loosen their purse strings again, that would bode well for shareholders.”

Over Christmas week, Sainsbury’s saw record sales, booked over 340,000 online grocery orders and saw “stellar growth” in its Argos Fast Track delivery and collection. Online shopping accounted for 20% of sales.