Festive treats set tills ringing at Sainsbury’s… but shares sink as Argos arm struggles

Record sales of pigs in blankets, mince pies and sparkling wine have helped Sainsbury’s to clinch a bumper Christmas.

The country’s second-largest supermarket said it out- performed rivals on food sales over retail’s ‘golden quarter’.

Its grocery sales over the 16 weeks to January 6 were 9.3 per cent higher than a year earlier as more customers opted for its ‘Taste the Difference’ own-label range.

Chief executive Simon Roberts reiterated hopes for profits of between £670million and £700million for the full year. 

‘We’ve grown grocery volumes ahead of the market for the fourth Christmas in a row,’ he said.

Grocery boost: Sainsbury’s said it outperformed its rivals on food sales over retail’s crucial ‘golden quarter’- but other parts of the business such as Argos lagged behind

Recent industry data suggests Sainsbury’s and Tesco were the only traditional big grocers to gain market share this winter – with Aldi, Lidl and Marks & Spencer also performing well, while Asda and Morrisons struggled.

But while Sainsbury’s benefited from sales of festive food, including almost 60m mince pies and 26m pigs in blankets, other parts of the business, such as Argos, lagged behind. 

Sales of general merchandise fell 0.6 per centand quarterly clothing sales were down 1.7 per cent–including a 6 per cent slide in the six weeks to January 6.

That left total sales for the third quarter up 7.4 per cent.

Roberts said the previous year was tough to compete with. Royal Mail strikes forced people to shop in stores in 2022, while sales at Argos spiked due to demand for energy-saving appliances amid the energy crisis.

There was no such boost this time. The City had blockbuster expectations but they were dashed due to its lacklustre non-food divisions.

The disappointing numbers sent shares down 6.3 per cent, or 19.4p, to 286.5p. 

Investors may have also been hoping for a profit upgrade but unchanged guidance means that profits could be similar to the £690million of the previous financial year.

And Roberts announced there would be a strategy update next month. The supermarket has been striving to lure shoppers from discounters, expanding its Aldi ‘price match’ to include more than 550 products.

Aldi and Lidl declared record Christmases last week, while Tesco and M&S are set to post their numbers today.

In recent months, food inflation has dropped across popular products including pasta and cheese, Roberts said.

But he added that shoppers were not likely to see widespread price cuts.

Roberts warned the cost of labour, which he described as a ‘key component of the food we all buy’, was not set to fall.

Earlier this month, Sainsbury’s announced it was spending £200million on pay rises.

AJ Bell investment director Russ Mould pondered whether Argos was ‘still the right fit’ for Sainsbury’s in the long-term.

He said: ‘Non-food sales were very disappointing, implying that Sainsbury’s is either leaving areas like clothing and Argos’ general merchandise offering to wither away or it simply isn’t pushing the products that people want.’

This post first appeared on Dailymail.co.uk