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Sainsbury’s reports strong first quarter growth

Published:  04 July, 2017

Sainsbury’s has reported 2.3% growth in like-for-like first quarter sales, excluding fuel, compared to a 0.3% increase seen in the previous quarter, partly in thanks to the sunny start to the summer.

Grocery sales jumped 3% in the 16 weeks to 1 July, alongside a 2.7% increase in total sales.

Clothing sales also shot up 7%, as its general merchandise sales were bolstered by the inclusion of Argos’s figures.

Mike Coupe, group chief executive, said: “We have delivered a strong performance, driven by our differentiated strategy, offering customers quality, value and choice across food, general merchandise, clothing and financial services.”

Sainsbury’s convenience store sales were up 10% with clothing sales up 7.2% while online grocery sales rose 8%.

Coupe said shoppers were snapping up Sainsbury’s own-label products after it had implemented hundreds of quality improvements and held prices on basics, including milk, chicken breast and eggs.

He said inflation, which is now running at more than 2.5% according to the CPI index, had started to hit towards the end of the period, but Sainsbury’s had “managed to keep a control over prices and the impact on customers.”

Playing down the impact of the weather, Coupe said the number of warm days over the whole period was “not far off the same” as last year. Instead, he pointed to Sainsbury’s improvement in price position relative to its competitors for the group’s improved performance.

Coupe also said there were signs that shoppers were choosing to eat at home rather than go out for meals as disposable income came under pressure from rising inflation.

The 3% growth in grocery sales was an impressive return to form for a brand which for years had “dodged the bloodletting” unleashed at the cheaper end of the market by the arrival of the discounters, said director of retail consultancy Retail Vision, John Ibbotson, adding the results were “a little short of a Lazarus moment”.

“No longer leaning precariously on the Argos crutch, the Sainsbury’s core business is back on its feet and growing food sales at a healthy clip.

“These results are the first to blur the progress of the two brands since last year’s acquisition – but Sainsbury’s no longer needs to hide behind Argos’s.

The proposed deal in which Sainsbury’s is thought to have tabled a £130m bid for Nisa was not mentioned in the results announcement.