Sainsbury’s Christmas sales jump as food inflation eases back

Over the past year, grocery revenues have been boosted by higher prices, as food manufacturers have passed on cost increases to many customers.

But on Wednesday, Sainsbury’s said it saw shoppers purchasing more products amid “lower inflation” over the latest period.

The chain said its customers bought record numbers of pigs in blankets, mince pies and sparkling wine over Christmas.

The strong grocery performance helped to offset a 4.2 per cent decline from Argos – driven by the closure of its Argos Ireland business – and a 6 per cent fall for Christmas clothing sales.

It came as total retail sales, excluding fuel, grew 6.5 per cent over 16 weeks to January 6.

Grocery sales were 9.3 per cent higher for the full quarter.

Simon Roberts, chief executive of Sainsbury’s, said: “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.

“There is a lot to be excited about and we remain absolutely committed to deliver for our customers, colleagues and shareholders.”

Richard Hunter, Head of Markets at interactive investor, commented: “Sainsbury’s decision to go back to basics is reaping clear rewards, as its grocery business continues to thrive amid a famously competitive backdrop.

“The group’s relentless focus on value offerings comes at a cost to the company, but the subsequent rewards are sales which are currently defying gravity.”

Charlie Huggins, Manager of the Quality Shares Portfolio at Wealth Club, commented: "Sainsbury's enjoyed another solid grocery performance in the third quarter, with stronger volumes offsetting lower inflation, resulting in further market share gains.

“Clothing and General Merchandise sales were weaker over the Christmas period, but the group has reiterated its profit guidance.

"Sainsbury's has worked hard to lower prices in the face of intense competition.

"The launch of Nectar prices, where Nectar card holders save money on everyday items seems to have been well received and has helped the group to hold its own against Tesco and the German discounters.

“Sainsbury's cannot afford to rest on its laurels. The supermarket sector remains intensely competitive and the UK consumer is far from being out of the woods, with the weaker clothing and General Merchandise sales pointing to an element of caution in consumer behaviour.”

"Nevertheless, Sainsbury's all-important grocery sales are still holding up well. With food inflation moderating, and wages going up, the pressure on the UK consumer is easing. This ought to be good news for Sainsbury's and its peers heading into 2024."