Argos gives a sales boost to Sainsbury’s

SAINSBURY’S used a Christmas trading update to prove its £1.4bn gamble on Argos had paid off.

Sales at the supermarket chain rose 0.1pc in the 15 weeks to January 7, despite analysts predicting a fall.

But Argos, which Sainsbury’s bought in September year last, saw revenue jump 4pc in the same period. It helped Britain’s second- biggest grocer confound expectations of a slowdown just one day after rival Morrisons revealed increased takings.

Sainsbury’s bought Argos to boost sales growth, improve its delivery network and encourage families to shop at both brands. Eventually it hopes all except the smallest stores will allow customers to collect Argos goods at the same time as doing their weekly shop.

Mike Coupe, chief executive, said: ‘Argos customers like the idea of the convenience it offers to their lives and Sainsbury’s customers buy into it as well.’

There are now 30 Argos stores and three Habitat outlets in Sainsbury’s supermarkets, and 200 digital collection points. Laith Khalaf, a senior analyst at Hargreaves Lansdown, said: ‘Argos pulled Sainsbury’s up by its bootstraps.’

Argos led the way in online sales, with 65pc of purchases made this way over the Black Friday period. That meant 500,000 Argos parcels had been picked up from Sainsbury’s stores since September, and 55,000 in the Christmas week.

The retailer is also ploughing ahead with savings and closing some High Street shops.

Like other supermarkets, the grocer has been hit by rising costs due to the fall in the pound since Britain’s Brexit vote last June.

However, uncertainty did not stop Sainsbury’s from celebrating a record Christmas week – thanks in part to an extra day’s trading. Sales reached more than £1bn in just seven days from 30m transactions.

Best- sellers included party food and Prosecco.

The full-year profit forecast was in line with market forecasts of £573m. Shares closed up 1pc, or 2.6p at 261.4p.