2nd Jul 2024 09:18
(Alliance News) - J Sainsbury PLC's grocery arm continued to impress, but slowing sales growth there and continued woes at Argos have given the supermarket chain something to be mindful of.
For the 16 weeks to 22 June 2024, its first-quarter, total sales rose 4.2% on-year. Grocery sales alone rose 4.8%.
Sainsbury's said total retail sales, excluding fuel, rose 2.6%, while like-for-like sales climbed 3.0%. The like-for-like measure also excludes fuel.
"We are pleased with our market-beating grocery performance and the early progress we're making against our next level Sainsbury's plan. We've been winning from competitors every month for 15 months, as more and more people are choosing Sainsbury's for their big weekly shop," Chief Executive Simon Roberts said.
Citing Kantar data, Sainsbury's said it made the "biggest market share gains of any grocer" in the 14 weeks to June 9.
Sainsbury reported volume growth has remained strong as inflation has slowed, despite tough weather comparatives in recent weeks.
Away from grocery, the picture was less bullish for the firm. General Merchandise & Clothing sales were down 4.3%. Argos sales fell 6.2%.
"Sainsbury's General Merchandise & Clothing performance reflects improvement in clothing trend offset by weaker seasonal general merchandise sales," it said.
"Argos sales declined against a particularly strong comparative period with significantly lower seasonal sales and weaker consumer electronics demand, notably in gaming."
Looking ahead, the firm still expects retail underlying operating profit between GBP1.01 billion and GBP1.06 billion, growth between 5% and 10% on-year. It continues to expect to generate at least GBP500 million of retail free cash flow.
Hargreaves Lansdown analyst Sophie Lund-Yates said that while Sainsbury's has reported slower growth, it has done "enough evidence to keep the faith".
"Overall, Sainsbury's has done just about all it can to better itself and it should be commended for that, but the Argos albatross around its neck can't be ignored," the analyst added.
RBC Brewin Dolphin analyst Stuart Lamont said that while Argos "has its challenges, there is a clear plan in place to put the brand on a surer footing longer term".
"Sainsbury's continues to demonstrate its resilience, with another strong performance in grocery volumes and market share gains," Lamont added.
"With plans to find another GBP1 billion in savings and a strengthening market position, the retail group is well placed among its competitors – even if its share price remains where it was more than three years ago."
Shares in the company traded 4.7% lower at 245.60 pence each in London on Tuesday morning.
By Eric Cunha, Alliance News news editor
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