1st Jul 2020 08:50
(Alliance News) - J Sainsbury PLC on Wednesday reported double-digit sales growth over the first quarter of its current financial year but said it remain cautious about the sales trajectory through the remainder of the year.
The FTSE 100-listed grocer said the Covid-19 pandemic continued to have a significant impact on its business in the 16 weeks to June 27.
Sainsbury's said it has delivered double-digit sales growth in Grocery during the period, ahead of the market, driven by very strong online growth.
Grocery sales rose 11% year-on-year, with general merchandise - including Argos sales growing 11% - advancing 7.2%.
While all 573 Argos standalone stores were closed for the majority of the quarter, the company said Argos performed very well online, growing 11%, with home delivery sales up 78% and click and collect sales up 53%.
Sainsbury's said it re-opened 174 Argos stores across the UK and Ireland as lockdown measures started to ease towards the end of the quarter, and expects to open 100 more in phase two in July.
Holding back group sales, however, was a 27% drop in clothing sales.
As a result, total retail sales in the first quarter were 8.5% higher, with like-for-like sales growing 8.2% - both excluding fuel.
Sainsbury's said Clothing and Fuel sales, whilst still down year-on-year, have started to recover more quickly than expected and its Financial Services business has an improved capital position versus the year end.
"Our business has changed fundamentally from four months ago. We have more than doubled our weekly sales of online groceries in recent weeks, SmartShop now accounts for more than half of sales in some supermarkets and Argos sales were strong while operating as an online-only business for almost twelve weeks," said Chief Executive Simon Roberts.
"Warm weather boosted food sales and sales in seasonal categories in Argos, but sales of clothing and fuel and trading in city centre Convenience stores were all significantly down year on year as a result of lockdown," continued Roberts.
"The coming weeks and months will continue to be challenging for our customers and our colleagues and we do not expect the current strong sales growth to continue," added Roberts.
Sainsbury's noted that its operating costs remain high, reflecting the costs of keeping customers and colleagues safe, significantly higher online participation, including prioritisation of elderly, disabled and vulnerable customers, and weak sales of fuel, clothing and general merchandise within Sainsbury's stores.
The stock was trading 1.6% higher in London on Wednesday at 212.00 pence a share.
By Evelina Grecenko; [email protected]
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