Sainsbury's Sees Strong Food Sales Growth, Argos Faces Challenges
Sainsbury's reported a 5% rise in food sales for the first half of the year, driven by growing market share and increased demand for its premium range. This growth has positioned Sainsbury's as a top performer in the British grocery market, with a market share reaching 15.2%.
CEO Simon Roberts attributed the strong food sales to shifting consumer habits, with more customers opting to eat at home and treat themselves. The company has focused heavily on food, investing in its Aldi price-match scheme, launching new products, and driving loyalty through Nectar prices.
However, the group faced headwinds from its struggling Argos division, with sales falling by 5% due to unseasonable weather and consumer caution. Sainsbury's responded with promotional activity and discounting, helping to improve Argos's performance in the latter part of the half-year period.
Total retail sales, excluding fuel, rose to £16.3 billion, up 3.1% from last year. Headline pre-tax profits grew by 4.7%, while statutory pre-tax profit fell 52% due to a planned investment across the business.
Sainsbury's is optimistic about the festive season, with early sales in its Christmas range and robust food orders setting a positive tone. The company projects an underlying operating profit of between £1.01 billion and £1.06 billion for the full year, anticipating growth of 5-10%.
Despite the early challenges, Sainsbury's expects a stronger performance for Argos in the second half, driven by festive shopping and Black Friday promotions.