UK grocer J Sainsbury reported third-quarter revenue that met analysts’ estimates, as it sold more non-food items, such as clothing.
Same-store sales fell 0.4 per cent, excluding fuel, in the 15 weeks ended 9 January, London-based Sainsbury's said in a recent statement. That marked an improvement from the previous quarter’s 1.1-per-cent decline and compared with the median analyst estimate for a 0.6-per-cent drop.
“These are pretty respectable results,” Bryan Roberts, an analyst at consultancy TCC Global, said by phone. “Sainsbury typically outperforms at Christmas because shoppers are willing to spend a little bit extra.”
Sainsbury was the best performing of the UK’s mainstream grocers at Christmas, according to Kantar Worldpanel. Shoppers turned to the Taste the Difference range for their holiday luxuries, boosting revenue across the offering by 18 per cent. Chief executive officer Mike Coupe is still finding growth hard to come by as German budget chains Aldi and Lidl win an ever-larger share of spending. The competition has seen the CEO set his sights on acquiring Home Retail Group Plc, whose Argos chain would augment Sainsbury’s non-food business.
Clothing sales rose 6 per cent, and general merchandise revenue gained 5 per cent, Sainsbury said. The grocer now expects sales in the second half of its financial year to improve upon the 1.6-per-cent decline it posted in the first half.
The stock fell 1.3 per cent to 248 pence as of 8.03 a.m. in London, paring a recent 3.3-per-cent gain.
In a presentation on its website, the grocer said that a union with Home Retail would lead to relocating a number of Home Retail’s Argos stores into nearby Sainsbury outlets. Argos already operates concessions in some Sainsbury stores. Sainsbury has until 2 February under UK takeover rules to announce whether it will make an offer for Home Retail.
Smaller competitor Wm Morrison Supermarkets Plc reported better-than-expected same-store sales growth of 0.2 per cent. Market-leader Tesco Plc is scheduled to announce holiday sales imminently.
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