Sainsbury’s cautious as Christmas sales just beat forecasts

LONDON: Sainsbury’s, Britain’s No. 2 supermarket group, reported a slight beat to forecasts for Christmas sales and said it was edging up its full-year profit guidance, thanks to better-than-expected synergies from the Argos business.

The group, which bought electricals and toys retailer Argos in 2016, also warned yesterday that market conditions remained challenging and it was cautious about the consumer environment in the year ahead.

Britons are facing pressure from slow wage growth and the jump in inflation that followed the 2016 Brexit vote.

Sainsbury’s said total retail likefor-like sales, excluding fuel, rose 1.1% in the 15 weeks to Jan 6, its fiscal third quarter – ahead of analysts’ average forecast of 0.9% and growth of 0.6% in the previous quarter.

Total grocery sales grew 2.3% with groceries online and convenience store sales up 8.2% and 7.3% respectively. Online accounted for 20% of the group’s sales during the quarter.

However, total general merchandise sales fell 1.4%.

Sainsbury’s said it won market share in general merchandise and clothing despite “challenging conditions”.

Sainsbury’s said it now expected to achieve £80mil (US$108mil)£85mil (US$115mil) of earnings syn- ergies from Argos by March 2018, ahead of previous guidance of £65mil.

As a consequence underlying pre-tax profit for the full 2017-18 year would be moderately ahead of the published analysts’ consensus – an underlying pre-tax profit of £559mil (US$755.77mil), down from £581mil in 2016-17.

Shares in Sainsbury’s, up 3% so far this year, closed Tuesday at £248.40, valuing the business at £5.5bil.

On Tuesday Britain’s fourth biggest supermarket chain Morrisons beat Christmas sales growth forecasts while industry data indicated market leader Tesco outperformed its listed rivals during the festive quarter. — Reuters