Pricing pressures for 2017 after Argos helps boost Sainbury’s sales
Supermarket giant Sainsbury’s has warned that the impact on prices from the slump in the pound remains “uncertain” after eking out a slender rise in sales over its festive quarter.
Britain’s second-biggest grocery chain said yesterday that it had delivered a “good” Christmas performance in the 15 weeks to 7 January. Like-for-like sales edged up 0.1 per cent, year-on-year, while robust Black Friday trading helped the group’s recent Argos acquisition notch up a 4 per cent hike in like-for-like takings.
The figures come after rival Morrisons reported stellar results on Tuesday while Tesco – the UK’S biggest retailer – is due to report today.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Argos pulled Sainsbury’s up by its bootstraps over the Christmas trading period, as the supermarket business failed to generate any sales growth on its own.
“However, against a backdrop of food deflation, flat sales are a pyrrhic victory for the supermarket, and represent an improvement on performance so far this financial year.
“Looking forward, 2017 promises to be a challenging year for the supermarkets, thanks to the falling pound, as they have limited scope to pass on the higher cost of imported food to customers in such a competitive environment. This currency crunch is likely to put pressure on margins, and profits.”
Sainsbury’s group chief executive Mike Coupe said: “The market remains very competitive and the impact of the devaluation of sterling remains uncertain.
“However, we are well placed to navigate the external environment and remain focused on delivering our strategy.” Coupe said the group had racked up record trading during the Christmas week, with more than 30 million customer transactions and in excess of £1 billion of sales across the business.
Combined sales across both the supermarket chain and Argos were 1 per cent higher excluding fuel.
Coupe said the Argos sales growth and trading boost seen in combined superstores “reinforced the case” for the acquisition. Sainsbury’s snapped up Argos owner Home Retail Group last year in a £1.4 million deal.
John Ibbotson, director of the retail consultancy Retail Vision, said: “So far, it’s a case of Sainsbury’s steadying the ship rather than plain sailing.
“Argos will be key to the longterm success of Sainsbury’s multi-channel strategy, so this is an encouraging start.” 0 The supermarket chain reported positive festive trading figures but has warned that the market remains ‘very competitive’