Festive cheer at Sainsbury’s

SAINSBURY’S cheered investors with record festive trading and more savings from its acquisition of Argos but warns of tough trading in general merchandise and clothing markets.

Britain’s second-biggest supermarket said sales at established stores rose by 1.1 per cent in the 15 weeks to Saturday, led by a 2.3 per cent increase in grocery takings as shoppers treated themselves to top-range Taste the Difference foods.

This included 8.2 per cent growth online and 7.3 per cent in convenience stores.

Growth in its Tu brand clothing slowed to 1 per cent from 9.4 per cent the previous year, while takings in general merchandise, including the Argos electricals business it bought for £1.4billion in 2016, were down 1.4 per cent.

It also operates 15 Habitat stores.

Chief executive Mike Coupe, pictured, said the 164 Argos outlets in Sainsbury’s stores had performed “particularly well”, including record sales during the Black Friday period, with increased sales of games consoles, mobile phones and audio technology.

General merchandise and clothing had both increased their share “in a challenging market”.

Coupe said: “We have to acknowledge the fact... and there’s certainly a little bit of a squeeze on disposable income and where people are able to defer purchases, they do.

“We have to be slightly cautious in our outlook because it’s reflective of the current consumer environment.”

But he said he hopes Sainsbury’s could benefit from tighter household budgets as consumers choose to eat out less often. Shares rose 5½p to 254p. Coupe said Sainsbury’s now expects to achieve £80 million £85 million of earnings synergies from Argos by March, £20million more than previous guidance. As a result, underlying annual profit is on track to beat City forecasts.

Sales at German chain Lidl grew by 16 per cent in December as it attracted a record number of shoppers and opened nine stores to take its total to 693.

It sold 60 per cent more luxury Christmas puddings and premium alcohol products also proved popular.

Lidl UK boss Christian Hartnagel said: “The commitment of our 20,500 colleagues across the country was key to our success during this busy period and I’m extremely grateful.”