Sainsbury shines in sluggish Christmas retail market

By Dan Colombini

- Last updated on GMT

Related tags Tesco

Sainsbury's outperformed many of its rivals over the festive season
Sainsbury's outperformed many of its rivals over the festive season
City analysts have described Sainsbury’s latest financial results as “excellent” with many of its retail rivals posting a sluggish performance for the all-important Christmas period.

Experts praised Sainsbury’s results for the period ending January 7, with rivals Morrisons​ and Marks & Spencer​ (M&S) all posting only slight increases in food growth.

Clive Black, analyst at Shore Capital, said: “Against a challenging market backdrop Shore Capital deems Sainsbury’s third quarterly performance to be excellent. Although, we should add that 2.1% like-for like (LFL) sales is not stellar, it is at the low end of management’s on-going target and within our expected range.​”

Sainsbury had also gained market share over the other multiples and “caught the prevailing mood of the consumer​”, he added.

Slowdown

Total sales at Sainsbury were up 7% for the period, with like-for-like sales seeing a 4.8% rise.

Earlier this week Morrisons and M&S's food division both reported moderate growth, posting rises in sales of and 0.7% and 4.5% respectively.

Waitrose also posted sales growth of 3.8% for the period.

M&S’ said that its food business performance propped up sluggish sales across the entire firm while Morrison’s attributed the slowdown to a strong performance from rival Asda.

Another firm to shine in the Christmas period was baker Greggs, according to Darren Shirley of Shore Capital.

Shirley described the increase in total sales at Greggs of 10.8%, with a LFL contribution of 5.1% as “encouraging​” and “resilient​”.

Market backdrop

Sales had been expected to improve at the multiples this year due to the considerably improved weather. This was compared with the heavy snowfall that prevented consumers from hitting the shops in December 2010.

However analysts said that the results had still come against “a challenging market backdrop​” with consumer purchases being “increasingly segmented​”.

Black concluded that, despite the mixed results, overall the supermarkets experienced a “satisfactory​” time over the festive season.

He said: “Within the various channels, food sales over the broader October to December timeframe were said to be up 1.5%, a particularly healthy score, with LFL sales 2.1% ahead.

"With inflation demonstrably easing back, sparked by October’s Big Price Drop launch from Tesco UK, and reflected in the Consumer Price Index data, the volume picture may have been a little better.”

Overall it appeared that supermarkets had a satisfactory time, he added. But there were just demonstrable winners and losers.

Shirley’s comments followed publication of the British Retail Council’s (BRC) Retail Sales Monitor which showed food inflation had increased by 4.2% in December compared with 4% the previous month.

Stephen Robertson, BRC director general said: “Falling commodity prices take time to work through to tinned and packet foods but shoppers will see that happen in the coming months.

“Consumers are likely to rein in spending in the wake of Christmas and price will remain the main battleground between retailers, meaning customers with money to spend will benefit​."

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