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| Record Christmas at Sainsbury’s 'shows logic of Argos takeover' | Record Christmas at Sainsbury’s 'shows logic of Argos takeover' |
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| A better than expected Christmas at Sainsbury’s has reinforced the logic of its £1.4bn takeover of Argos, according to the supermarket’s boss. | A better than expected Christmas at Sainsbury’s has reinforced the logic of its £1.4bn takeover of Argos, according to the supermarket’s boss. |
| Sainsbury’s shares rose more than 6% as the retailer surprised the City with a record Christmas week and its first sales growth since March, before settling back to close just over 1% higher. | |
| Like-for-like sales excluding fuel, stripping out those at stores open for less than a year, rose by 0.1% in the 15 weeks to 7 January, beating expectations of a 0.8% drop. | Like-for-like sales excluding fuel, stripping out those at stores open for less than a year, rose by 0.1% in the 15 weeks to 7 January, beating expectations of a 0.8% drop. |
| Sainsbury’s said the volume of groceries sold remained steady as it slashed the number of multibuy offers in stores and price deflation slowed to 0.5% in the quarter compared with a 1% fall in the previous six months. | Sainsbury’s said the volume of groceries sold remained steady as it slashed the number of multibuy offers in stores and price deflation slowed to 0.5% in the quarter compared with a 1% fall in the previous six months. |
| Britain’s second largest supermarket chain said online groceries, convenience stores, clothing and other non-food performed strongly in the third quarter. Food and grocery sales in established supermarkets fell for the group as a whole, but rose by 1-2% in those containing Argos outlets. | |
| Mike Coupe, Sainsbury’s chief executive, said: “We continue to see the grocery supermarket business being challenging but we know that we have some solutions to that – not least, when we put in an Argos store grocery sales go up. We believe we now have our destiny in our own hands.” | Mike Coupe, Sainsbury’s chief executive, said: “We continue to see the grocery supermarket business being challenging but we know that we have some solutions to that – not least, when we put in an Argos store grocery sales go up. We believe we now have our destiny in our own hands.” |
| The group plans to put 250 Argos outlets into Sainsbury’s stores over the next three years, up from 30 at present. At least 15 more will be open by the beginning of March, some of which are expected to be relocated from high streets and retail parks. | The group plans to put 250 Argos outlets into Sainsbury’s stores over the next three years, up from 30 at present. At least 15 more will be open by the beginning of March, some of which are expected to be relocated from high streets and retail parks. |
| Sainsbury’s sales growth was lower than the 2.9% reported by Morrisons, which enjoyed its best Christmas in seven years. | Sainsbury’s sales growth was lower than the 2.9% reported by Morrisons, which enjoyed its best Christmas in seven years. |
| Booths, the upmarket northern grocer, reported a 2.6% rise in sales at established stores during the three weeks to 7 January, partly bolstered by the full reopening of its Keswick store, which was affected by flooding in 2015. The company said sales of champagne, salmon and craft ales had been particularly strong. | |
| Coupe said Sainsbury’s had achieved a “very creditable performance in a very challenging period of time”. | Coupe said Sainsbury’s had achieved a “very creditable performance in a very challenging period of time”. |
| “We haven’t been through some of the trevails and traumas some of our competitors have been through,” he said. “We’ve had a pretty consistent performance over the last five years and these numbers give us and the outside world confidence that we are putting the building blocks in place for the future. We have the right strategy.” | “We haven’t been through some of the trevails and traumas some of our competitors have been through,” he said. “We’ve had a pretty consistent performance over the last five years and these numbers give us and the outside world confidence that we are putting the building blocks in place for the future. We have the right strategy.” |
| Like-for-like sales at Argos rose by 4%, more than double the rate expected by the City, driven by its Black Friday offers and the key Christmas trading period. Toys and technology including Fitbits, mobile phones and computers all sold well. | Like-for-like sales at Argos rose by 4%, more than double the rate expected by the City, driven by its Black Friday offers and the key Christmas trading period. Toys and technology including Fitbits, mobile phones and computers all sold well. |
| Argos booked more than half its sales online, helping the group tap into a switch away from high streets towards the internet over Christmas. | Argos booked more than half its sales online, helping the group tap into a switch away from high streets towards the internet over Christmas. |
| Sainsbury’s sales growth was boosted by a 10% rise in clothing sales, 9% growth online and a 6% rise in sales at its convenience stores. While food sales slipped back, Coupe insisted that Sainsbury’s had not become distracted by the Argos acquisition and expansion of its bank and non-food business. | Sainsbury’s sales growth was boosted by a 10% rise in clothing sales, 9% growth online and a 6% rise in sales at its convenience stores. While food sales slipped back, Coupe insisted that Sainsbury’s had not become distracted by the Argos acquisition and expansion of its bank and non-food business. |
| He said Sainsbury’s had experienced growth in areas where it had invested in price and quality such as its premium Taste the Difference party food, up by 50%, and Freefrom range of specialist allergy friendly foods, up 8%. | He said Sainsbury’s had experienced growth in areas where it had invested in price and quality such as its premium Taste the Difference party food, up by 50%, and Freefrom range of specialist allergy friendly foods, up 8%. |
| “The heart of the business is all about being brilliant at food,” he said. | “The heart of the business is all about being brilliant at food,” he said. |
| But Coupe sounded a note of caution about the months ahead, partly because of the sharp drop in the value of the pound since the Brexit vote in June. A weaker pound makes products imported from abroad more expensive. | But Coupe sounded a note of caution about the months ahead, partly because of the sharp drop in the value of the pound since the Brexit vote in June. A weaker pound makes products imported from abroad more expensive. |
| He 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.” | He 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.” |
| Sainsbury’s is ploughing ahead with cost savings. On Monday it will begin consultation with nearly 500 Argos staff at the Magna Park distribution centre near Milton Keynes, which will close at the end of this year. | |
| Workers will be transferred to Wincanton, a logistics firm which runs a number of Argos’s warehouses, and many will have the opportunity to move to its site in Kettering. | |
| The Unite union said the move was “a slap in the face for a long-established and loyal workforce and it is also a blow for the local economy.” | |
| It said some workers from Magna Park would not be able to commute to Kettering, which is 25 miles away. |