Further evidence emerged today of how the big retailers performed over the all-important Christmas period, and it proved to be something of a mixed picture at Sainsbury’s.
Overall, total retail sales were up 6.5% in the six weeks to January 6 compared with the same period last year, which included a strong showing on the grocery front. Christmas grocery sales up 8.6% over the six-week period and by 9.3% for the 16 weeks to January 6.
But not everything about the company’s festive performance lived up to expectations. General merchandise sales fell sharply, tumbling by 3.7% over the six-week Christmas period (and by 0.6% over the 16 weeks), which Sainsbury’s said reflected tough comparisons with last year. Back then, its Argos business benefited from the postal strike and energy-saving products amid the cost-of-living crisis. Christmas clothing sales, meanwhile, were down 6% in the six weeks to January 6.
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Investors responded by sending shares in the company down more than 6%, with the disappointing performance by Argos and the clothing division leading one analyst to suggest Sainsbury’s had perhaps focused on food at the expense of other parts of the business.
“Sainsbury’s has a ‘food first’ strategy and the big question from its Christmas trading update is whether management is guilty of neglecting the other parts of the group,” said Russ Mould, investment director at AJ Bell.
“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.
“Sainsbury’s partially blames tough comparative figures from the previous year, yet it does feel as if Argos, in particular, has been bumped down the list of priorities for the group since Simon Roberts took over as chief executive.”
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But Sainsbury’s problems don’t end there. Mr Roberts said today that it has been holding “regular calls” with the UK Government over the crisis in the Red Sea, where attacks on shipping lines by the Iran-backed Houthi rebels of Yemen are disturbing supply lines.
The attacks have been launched against commercial ships in response to Israel’s incursion into Gaza, following the attacks by Hamas on October 7, and are causing shipping companies to avoid the Red Sea, leading to longer delivery times for UK supermarkets.
Mr Roberts said today that shipments of wine and general merchandise were facing delays.
Shares in Sainsbury’s were trading down 6% at 287.6p at 4pm.
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