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First quarter like-for-like sales (excluding fuel) at Sainsbury’s have surged by 2.3% compared to a 0.3% rise in the fourth quarter of its previous financial year.

The strong sales rise was driven by a 3% jump in grocery sales – compared to just a 0.3% rise in the previous quarter – while general merchandise was up 1% and clothing up 7.2%.

Transaction numbers were up 1.9% at Sainsbury’s.

Overall retail sales, excluding the impact of the sale of its pharmacy business, were up 2.7% - a rise on the 0.7% growth in the fourth quarter.

CEO Mike Coupe commented: “”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.

“We have seen strong food sales where we have invested in product innovation, such as our new Summer eating ranges. Our Produce category, where we know quality matters most to customers, performed particularly well, outperforming the market with volume growth of over one per cent.

“Customers recognise that we offer a leading combination of quality and value and we have worked with suppliers to improve our price position versus competitors.”

Online grocery sales grew by 8% and convenience delivered growth of 10%.

Sainsbury’s said its general merchandise growth of 1% on an underlying basis - down from 1.5% in the fourth quarter – “outperformed the market” despite the impact of closing 78 Argos in Homebase and 84 Habitat in Homebase concessions over the last year

It said Argos continues to perform well, growing market share, particularly in mobile, audio and tech and good growth in core electricals and toys.

Online sales at Argos were up 10% with Argos Fast Track delivery up 36% and collection up 64%.

Coupe said: “General merchandise and clothing, including Argos, outperformed the market, with Fast Track delivery and collection seeing a stellar performance during the quarter, particularly during the period of warm weather when customers wanted to buy and receive their products the same day. Argos customers are increasingly choosing to shop with us online, consistent with our objective of being a leading digital retailer.

“The market is competitive and we continue to manage cost price pressures closely. Our strategy is delivering and we are well placed to navigate the external environment.”

During the period it 36 Argos Digital stores in Sainsbury’s supermarkets, bringing the total to 75. A total of 17 of the 36 stores replaced an existing Argos store, taking the total number of replacement stores to 20. It also opened three Mini Habitat stores, bringing the total to 11.

It said it remains on track to open around 135 Argos Digital stores in Sainsbury’s supermarkets by the end of 2017/18, which will take the total to 175

Sainsbury’s shares have gained 1% in early trading to 251.4p

Morning update

Chemist chain Superdrug, part of the A.S. Watson Group, has released its financial results for the 53 weeks to 31 December, showing a 41% jump in pre-tax profit and a 10.4% rise in sales.

The newly filed accounts at Companies House show a pre-tax profit for 2016 of £80.4m, an increase of 41% from the pre-tax profit of £56.8 million reported for 2015.

Sales of £1.21bn represented an increase of 10.4%, driven by sales from like for like stores which increased by 7.8%, and the benefit of 23 new stores opened in the period.

Superdrug said this strong LFL sales growth is on top of the 6.6% recorded in 2015 “showing the company’s continued growth momentum”.

It said all the main health and beauty categories contributed to the strong sales performance, led by cosmetics which grew by 14% supported by the introduction of new brands and investment to drive customer engagement and transactions.

Healthcare and wellbeing also grew strongly at 12%, supported by range extension in diet and fitness plus the continued growth of Online Doctor, a service which dispenses direct to customers’ doors or nearby stores. continued to perform strongly with sales increasing by over 60%, supported by improved website functionality and enhanced delivery solutions for customers.

2016 saw a major store opening programme which included a new retail park format in prime locations such as Fosse Park, Leicester and Castlepoint, Bournemouth. A refurbishment programme of the existing estate saw new cosmetics display units in over 300 stores, and similar new concepts for skincare and fragrance counters are being trialled successfully. The Wellbeing store format was rolled out to a further six stores.

Superdrug had 789 stores in UK and Ireland at the period end.

On the markets this morning, the FTSE 100 has opened down 0.4% to 7,348.4pts.

Early risers include Worldpay Group (WPG), up 10.5% to 352.9p, Premier Foods (PFD), up 2.5% to 41p and Majestic Wine (WINE), up 1.4% to 320p.

Fallers so far this morning include John Menzies (MNZS), down 1.6% to 679p, B&M European Value Retail (BME), down 1.2% to 333.9p and Fevertree Drinks (FEVR), down 1.1% to 1,686p.

Yesterday in the City

Weak UK manufacturing data yesterday hit the value of the pound and saw share price falls across consumer-facing firms despite the FTSE 100 holding steady.

The pound was unable to stay above $1.30 slipping to $1.294 by close in London.

International mining and oil firms helped the FTSE rise 0.9% to 7,377.1pts but the more domestically focussed FTSE 250 slipped 0.1% to 19,320.4pts.

It was a trough day for grocery retailers, with Morrisons (MRW) down 1.5% to 237.6p, Booker Group (BOK), down 1.2% to 184p, Sainsbury’s down 1.1% ahead of this morning’s trading update to 248.9p and Tesco (TSCO) down 0.9% to 167.4p.

Other retailers to suffer included WH Smith (SMWH), down 1.2% to 1,694p and Greggs (GRG), down 0.9% to 1,070p.

In the wider food and drink sector, pub operator and brewer Greene King (GNK) was down 3.6% to 649.5p, PayPoint (PAY), was down 2.3% to 846.5p, Dairy Crest (DCG), fell 2.3% to 585.5p and Greencore (GNC), was down 2% to 214p.

One of the day’s few risers was Marks & Spencer (MKS), rising 1.1% to 337.1p, while packaging firm DS Smith (SMDS) was up 1.6% to 481.1p and McBride (MCB) jumped 2.3% to 191.5p.

Internationally, Danone’s (BN) agreement to sell US organic yoghurt brand Stonyfield to its French rival Lactalis for $875m (£672.5m) saw the French dairy group rise 1.3% to €66.68.