J SAINSBURY has lifted its profit expectations for the year after a “strong Christmas week”, boosted by low turkey and vegetable prices, helped it increase like for like sales by 1.1 per cent in the 15 weeks to January 6.
The supermarket chain followed Morrisons’ better than expected festive trading as it reported growth of 2.3 per cent in total grocery sales in the quarter straddling the key Christmas and New Year period. That came as the company received more than 340,000 online grocery orders, up 8.2 per cent, and grew sales in its convenience stores by 7.3 per cent.
Elsewhere Sainsbury’s underlined the continuing benefit of its acquisition of Home Retail Group, reporting “stellar growth” in the Argos Fast Track delivery and collection operation, which grew by 39 per cent and 25 per cent respectively. Sainsbury’s also saw record sales in Argos over the Black Friday period, with the operation growing market share amid strong growth in video games consoles such as Xbox One X and Nintendo Switch, as well as the iPhone X mobile phone.
However, sales in general merchandising overall fell by 1.4 per cent in the third quarter, though the company said it had outperformed the market and grown share in challenging conditions. Clothing sales rose by one per cent.
Sainsbury’s said its online operation accounted for 20 per cent of group sales over the period.
It now expects underlying profit for 2017/18 to be “moderately ahead” of the published consensus of £559 million, saying it now expects to achieve £80m to £85m of underlying synergies from the Argos acquisition by March. The previous guidance on synergies had been £65m.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said Sainsbury’s had turned in a “solid” third quarter. He added: “Following the acquisition of Home Retail Group, the combination of Sainsbury’s and Argos has proved greater than the sum of its parts, and as a result the supermarket group is lifting profit forecasts for the year.”
Shares closed up 2.2 per cent, or 5.5p, 253.9p.
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