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Sainsbury’s has boosted food volumes by more than the wider grocery market over Christmas thanks to it Nectar Prices promotions and shoppers trading up to its premium Taste the Difference range.
Sales in the six weeks to 6 January 2024 increased 8.6% as volume growth offset lower inflation than the same time last year.
However, the strong food performance was weighed down by weaker trading at Argos, which registered a 4.2% decline in sales over the festive period, while clothing sales also fell 6%.
CEO Simon Roberts said more customers were choosing to shop at Sainsbury’s thanks to the group’s “determined focus on value, product innovation and service”.
“We’ve worked hard to really deliver for our customers this quarter and have grown grocery volumes ahead of the market for the fourth Christmas in a row.
“This was our first Christmas powered by Nectar Prices, helping customers save an average of £16 on an £80 Christmas shop. We delivered our best ever value Christmas roast and customers bought record numbers of pigs in blankets, mince pies and sparkling wine. Taste the Difference sales grew ahead of the market as families treated themselves.”
Revenues across the third quarter as a whole increased 6.5%, excluding fuel, with a like-for-like rise of 7.4%. General merchandise sales over the 16-week period fell 0.6%, with Argos down 0.9%.
Roberts claimed Argos performed better than rivals in a “highly promotional market” and suffered from comparisions with an “exceptional” Christmas performance in 2022.
Sainsbury’s upheld its profits guidance for the financial year of between £670m and £700m, with the strong performance in grocery offsetting the weaker GM division.
“We enter 2024 with strong momentum and next month we will share our updated strategy, building on all we’ve done to put food back at the heart of Sainsbury’s over the last three years,” Roberts added.
“There is a lot to be excited about and we remain absolutely committed to deliver for our customers, colleagues and shareholders.”
Shares in the retailer sank 3.5% to 295.3p as the markets reacted to the disappointing Christmas for Argos.
Morning update
Greggs has increased like-for-like sales in the fourth quarter of 2023 by 9.4% and said inflationary pressures were now reducing.
The high street bakery chain said in a pre-close trading update that sales in the final three months of the year were boosted despite a falling contribution from higher prices as tansaction numbers continued to grow.
It helped total sales for 2023 to jump 19.6% to £1.8bn, with like-for-like sales up 13.7%.
Greggs opened a record 220 new shops in 2023, leaving the group with more than 2,400 sites in its estate at the year end.
CEO Roisin Currie said 2023 was a year of further progress by Greggs.
“I am proud of our teams, who did a fantastic job serving more customers as we continue to grow our shop estate and offer greater availability through digital channels and extended trading hours,” she added.
“We enter 2024 with plans to continue to invest in our shops and expand supply chain capacity to deliver the growth strategy, supported by our strong balance sheet. Our value-for-money offer, and the quality of our freshly prepared food and drink, continue to evolve and position us well for further progress in the year ahead.”
The group said profits would be in line with previous expections given the strong trading in the final quarter.
“As expected, inflationary pressures are reducing and with good forward cover on food, packaging and energy we anticipate a more stable cost base in the coming year,” the trading statement added.
Nichols profits to beat market expectations
Vimto owner Nichols has upgraded profit expectations for 2023 after delivering “a strong performance”.
Revenues in the year increased 3.5% to £170.7m, with sales in the packaged business up 6.1%, with the group highlighting particularly strong progress internationally, with export sales jumping 16.8%.
Nichols said gross margins had been “largely maintained” despite the “considerable” inflationary pressures early in the year.
It added the group had also started to see earlier-than-expected benefits from the restructuring of the out-of-home business.
CEO Andrew Milne said: “Nichols has delivered a strong performance in FY23 making good progress against our strategic plans and achieving a PBT outcome ahead of market expectations.
“This is a great testament to the strength of the group’s business model and brands, with our established UK position complemented by strong momentum internationally.
“Looking ahead into 2024 we remain focused on continuing to implement our strategic plans and delivering further progress against our long-term ambitions.”
Morning shares
The FTSE 100 opened 0.2% lower to 7,667.80pts.
In contrast to Sainsbury’s shares falling this morning, Greggs has rocketed 8.4% higher to 2,682p and Nichols jumped 4.9% to 1,185p.
Elsewhere, Naked Wines increased 4.7% to 56p and AG Barr rose 1.5% to 535p.
Fallers included Tesco, down 1.5% to 296.1p, Virgin Wines UK, down 2% to 37.3p, and Supermarket Income REIT, down 1.1% to 84p.
Yesterday in the City
The FTSE 100 fell slightly 0.1% to 7,683.96pts.
The grocery retail all-important Christmas updates got underway yesterday, with shares in discounter B&M being pretty much unmoved as it reported a “pleasing” quarter with modest like-for-like growth underpinning a 5% rise in group revenues. The stock fell 0.4% to 559.4p.
Sainsbury’s dipped 1.2% to 306.7p ahead of this morning’s trading statement, while Tesco and M&S, which report on Thursday, fell 0.9% to 300.7p and 1.8% to 285.2p respectively.
Other fallers yesterday included Ocado, down 3.5% to 708.8p, THG, down 3.9% to 71.1p, and Deliveroo, down 2.9% to 126.5p.
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