Sainsbury’s (SBRY) has blamed “cautious consumer spending” for a 1.1% fall in like-for-like sales over the Christmas period.
The outlook remains “uncertain”, the retailer said, as it reported a 0.4% dip in total sales for the 15 weeks to 5 January.
Grocery sales rose 0.4%, bolstered by a 3% jump in convenience store sales and 6% rise in online grocery.
The retailer’s general merchandise arm, which includes Argos, reported a sales slump of 2.3%, while clothing sales slipped 0.2%.
Sales fell in the quarter due to “cautious consumer spending” and the “decision to reduce promotional activity around Black Friday”, said group chief executive Mike Coupe.
Sales from Argos stores located in Sainsbury’s supermarkets have risen by 10% year-on-year, the retailer added.
“Christmas came late this year and I am pleased with the excellent service and availability that we gave customers across the group,” said Coupe.
“Sainsbury’s stores were well set up to deal with customers doing their big Christmas shops later than usual and Convenience stores hit a new record on Christmas Eve.
“Sainsbury’s is focused on offering distinctive food at great prices. Grocery sales were solid across the quarter and our price position versus our competitors improved, with our £9 turkey crowns and 30p vegetables proving particularly popular.
“Retail markets are highly competitive and very promotional and the consumer outlook continues to be uncertain. However, we are well placed to navigate the external environment and remain focused on delivering our strategy.”
The update by Sainsbury’s, which is seeking regulatory approval for its merger with Asda, follows Morrisons’ announcement of a sharp slowdown in sales growth yesterday.
Sainsbury’s shares dropped 0.7% to 264.7p in early trading.
Underlying group sales surged 6.3% at Majestic Wine (WINE) driven by Naked Wines, during the 10 weeks ending 31 December.
Sales accelerated from 4.1% growth in the 2017 Christmas trading period, on the back of a “strong performance” by the direct-to-consumer arm which it acquired in 2015.
Naked Wines sales surged 15.9%, with 21% growth in the US where the retailer is “accelerating investment”, while UK sales growth returned to double figures, at 12.2%.
Majestic Retail sales meanwhile rose a more modest 1.5%, after it “encountered difficult trading conditions amidst economic uncertainty and weak consumer confidence”.
Despite a 1.2% drop in gross margins driven by the “very price-promotional market”, pre-tax profits for the full year are “broadly in line with market consensus”, it said.
“The team have worked really hard over the Christmas trading period and have delivered sales growth across all our business units,” commented group chief executive Rowan Gormley.
“While trading has been challenging over the Christmas period, the trends we reported in November are the same (namely strong growth in our overseas markets and our digital propositions but headwinds for our UK Retail stores).
“We look forward to setting out more of our future plans for the group, including the Retail business with our full year results in June.”
Greggs (GRG) has pushed up its profit estimates for the year, after like-for-like sales in the fourth quarter jumped 5.2%.
The food-to-go chain saw progress in growth categories including hot drinks and breakfast, as it reported 2.9% like-for-like growth for the full year.
Total sales rose 7.2% on the back 149 new store openings during 2018, growing its estate to 1,953 shops. It expects to open between 90 and 100 stores in 2019, it added.
Seasonal products, such as its festive bake and mince pies, sold well, it said, while the launch of its vegan sausage roll also “proved popular”.
“We delivered a very strong finish to 2018 despite the well-publicised challenges in the consumer sector,” commented chief executive Roger Whiteside.
“This performance was broad-based, reflecting the strength of our range of freshly-prepared food and drinks, and the strategic changes that we have made in recent years to focus more effectively on the food-on-the-go market.
“In the year ahead, we will continue to innovate with products designed to reflect changing consumer tastes, and by opening in new locations that make Greggs even more accessible to customers.
“The investments that we are making in our supply chain will allow us to deliver the outstanding value and quality that Greggs is famous for across a growing shop estate.”
Vimto-maker Nichols (NICL) reported a 6.9% jump in sales to £142m for the year ended 31 December 2018, driven by double-figure growth in the UK.
Despite the impact of April’s sugar levy, UK sales rose 12.6% to £114.6m on the back of “significant investment”, the supplier said.
The increase was driven by a 15.1% rise in Out Of Home channel sales, pushed up by “strong” sales of dispensed soft drinks and frozen beverage products.
The group’s total international sales however slipped down to £27.4m in 2018, from £31m in the previous year, following a £3.4m sales slump in the Middle East.
Nichols’ board is “very pleased” with results, it said, and expects a year-on-year profit rise that is “in line with expectations”.
The FTSE 100 has started the day on a positive note, rising 0.5% to 6,899pts, following from growth yesterday.
The early risers include Greggs (GRG), up 5.9% to 1,448p, Ocado Group (OCDO), up 3.5% to 890p, Carr’s group (CARR), up 3.1% to 154.7p and Nichols (NICL), up 2.9% to 1,481.2p.
The early fallers include PayPoint (PAY), down 3.7% to 801p, MacFarlane Group (MACF), down 1.2% to 80p and Devro (DVO), down 1.1% to 163p.
Yesterday in the city
The FTSE 100 rallied to rise 0.7% to 6,861pts, as improvements in US-Chinese trade talks helped to boost the European markets.
However, overall grocery sales growth fell back in the Christmas period according to the latest market share figures from Kantar Worldpanel and Nielsen as lower inflation and a high level of discounts took its toll.
Morrisons (MRW) was the latest retailer to suffer from consumer malaise, as shares slipped 3.2% to 212.6p after its core retail business grew by a modest 0.6%.
For the nine weeks to 6 January, total group like-for-like sales excluding fuel were up 3.6%, with retail accounting for growth of 0.6% and wholesale of 3%.
Another heavy faller was agricultural firm Carr’s Group (CARR), which slid 6.1% to 150p, after stating trading was in line with expectations in an update for the 18 weeks to 5 January.
Other fallers included MP Evans Group (MPE), down 1.5% to 644p, Bakkavor (BAKK), down 1.4% to 141.6p and Stobart Group (STOB), down 2.9% to 153.2p.
AIM-listed retail technology firm Eagle Eye Solutions saw the day’s biggest rise, jumping 9% to 109p, the day after it announced a new five year deal to work with Waitrose.
Ahead of its Christmas trading update on Thursday, Marks & Spencer (MKS) jumped 5.6% to 275.2p.
Other risers yesterday included Smurfit Kappa Group (SKG), up 6.1% to 2,208p, Greene King (GNK), up 5.6% to 584p, Associated British Food (ABF), up 3.6% to 2,231p, and Nichols (NICL), up 3.4% to 1,440p.