Sales at J Sainsbury have edged higher over the past six months as the supermarket weathered supply chain shortages and won back shoppers from its food retail rivals.
Simon Roberts, 50, chief executive, declared that the retailer was in a good position as it geared up for Christmas and toasted its “scale, advanced cost-saving programme, logistics and strong supplier relationships”.
Supermarkets have faced numerous challenges including empty shelves caused by a shortage of HGV drivers; a carbon dioxide shortage that threatened supplies of meat, packed cheese and fizzy drinks; fuel panic-buying; and the continued measures of managing staff absences and safety measures during the pandemic. Roberts called it a tricky period.
Despite the pressures Sainsbury’s recorded a 23 per cent increase in headline profits to £371 million for the six months to September 18 and £389 million of statutory pre-tax profits versus a £179 million loss last year when it faced heavy charges related to the restructuring of its Argos brand. The company said it was still on track to deliver £660 million of profits this year.
It recorded a 0.8 per cent rise in food sales during the period, 9.1 per cent more than two years ago. Sainsbury’s performance is better than early predictions that supermarkets would now be facing negative growth after last year’s stockpiling frenzy and surge in demand for food at home.
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Sainsbury, the UK’s second largest supermarket, was founded in 1869 and has 180,000 employees and 1,411 shops. Its shares fell by 9.51p, or 3.29 per cent, to 279.39p in morning trading.
The company said that it had grown market share and won back customers from all its rivals as it had focused on improving its value-for-money credentials, largely through its Aldi Price Match scheme, and consumers continued to eat at home more. It has also announced a new Nectar card promotion to give personalised discounts to shoppers.
Roberts said: “We are making good progress delivering our plan to put food back at the heart of Sainsbury’s. We have grown market share through improving value for customers, tripling our rate of food innovation and delivering customer satisfaction ahead of our key competitors.”
He added that customers were returning to many pre-pandemic shopping habits, with more shoppers returning to its shops, but demand for online slots remained double pre-pandemic levels and it is now the second largest online grocery retailer after Tesco. Year-on-year online grocery sales are 13 per cent higher and 128 per cent more than two years ago, accounting for 17 per cent of Sainsbury’s food revenues.
General merchandise sales fell by 5.7 per cent to £3.1 billion during the period compared with last year when shoppers were still able to visit Sainsbury’s shops to buy home office equipment and video games from Argos counters when its high street rivals had to shut during lockdown. Argos sales were down by 7.3 per cent year-on-year but 2.7 per cent higher than two years ago. The business said that 86 per cent of Argos sales were now online.
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Clothing sales increased by a third to £500 million after a year of suppressed demand from new outfits and the supermarket stripping back promotions.
Fuel sales also grew by 62.7 per cent during the period as traffic volumes recovered with people taking more short trips as Covid-19 restrictions eased, although petrol sales remain 9.9 per cent below pre-pandemic levels during the period.
