Relief as Sainsbury sales ease upward
The British retailer brings its mostly miserable 2016 to a close with strong sales numbers, sending the stock up as much as 7%
London — J Sainsbury shares surged the most in more than a year on Wednesday after better-than-expected holiday sales eased concerns over its prospects and provided another sign that the UK’s supermarkets had a better-than-expected Christmas.
The stock rose as much as 7.1% — the steepest intraday gain since January 5 2016 — on news that same-store sales at Sainsbury supermarkets rose 0.1%, excluding fuel, beating the median estimate for a 0.8% drop. Third-quarter revenue also topped projections at its Argos chain after its acquisition in 2016.
The report is a reminder of Sainsbury’s resilience amid revivals at market leader Tesco and WM Morrison Supermarkets, which on Tuesday posted its best Christmas sales in seven years. Having resisted the incursions of discounters Aldi and Lidl better than most over recent years, Sainsbury’s growth has fallen behind rivals.
"After a mostly miserable 2016, the struggling brand’s sighs of relief are audible," said John Ibbotson, director of consultant Retail Vision. "But talk of a turnaround is a touch premature. So far, it’s a case of Sainsbury’s steadying the ship rather than plain sailing."
Much of the third-quarter sales growth was fuelled by areas outside Sainsbury’s main grocery business, which remains in decline. Clothing sales rose 10% as the company continued to take market share from fashion retailers such as Next, which cut its profit forecast after reporting disappointing Christmas sales.
Growth at Argos provided a boost for CEO Mike Coupe, who has been contending with investor scepticism over the £1.4bn acquisition. Same-store sales at the chain rose 4%, beating analyst estimates for 1% growth.