Shares in Sainsbury's (SBRY), Britain’s second-biggest supermarket chain by market share, drifted off 0.5% to 229.8p in line with the FTSE 100 on Wednesday morning after it delivered a mixed third quarter trading update.

In total, like-for-like sales for the 15 weeks to 4 January were down 0.7% excluding fuel sales. This compared with a 0.2% fall in like-for-likes ex-fuel in the second quarter and a 1.1% fall in the same quarter a year ago.


On the plus side, grocery sales were up 0.4% over the period, slightly ahead of market expectations. Growth was helped by a 7.3% increase in online grocery orders, with the Christmas food-ordering service seeing its highest ever level of demand as 385,000 customers ordered online in the week before Christmas.

In a similar vein, the Convenience store division had its second-biggest ever trading day on Christmas Eve. Sainsbury's was also the only retailer to see growth in its value own-label sales over the period, according to data from Kantar.

Clothing sales saw an increase of 4.4%, better than the second quarter’s 3.3% growth and well ahead of last year thanks to the colder winter weather.


However, sales of general merchandise were disappointing, down 3.9% compared with a 2% drop in the second quarter and a 2.3% drop in the same quarter last year.

Although Argos had its biggest ever digital trading day on Black Friday, with 12 orders every second at its peak, sales over the Christmas period suffered as a result of demand being ‘brought forward’.

According to the company’s own statistics, Argos outperformed the market in consumer electronics but sales of toys and games were down across the board and Argos was no exception.


Chief executive Mike Coupe acknowledged that the outlook was still ‘highly competitive and promotional, and the consumer outlook continues to be uncertain.’

Despite the headwinds, Coupe believes Sainsbury’s has ‘a real sense of momentum’ and its investment plan is showing results with the grocer garnering record customer satisfaction scores and an increased level of customer engagement.

Clive Black, head of research at Shore Capital, described today's update as 'a decent performance in what is clearly a challenging market'.

He also suggested that Sainsbury's had raised its operating performance in-store over the last year as a result of 'improved management focus' after it terminated its proposed merger with Asda.


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Issue Date: 08 Jan 2020