finance

Sainsbury's reports better-than-expected sales



Sainsbury’s has reported a better-than-expected level of sales during the last three months.

The supermarket chain’s chief executive Simon Roberts said households appeared to be staying at home to eat rather than going to restaurants and cafes, despite Covid-19 restrictions easing.

In the 16 weeks to 26 June, sales were up 1.6% compared with the same period a year ago – which was at the height of the first wave, when shelves were stripped bare with panic-buying.

City analysts had expected to see a fall of around 4.1%.

However, sales at Argos were down 3.7%, as the stocking-up on home office equipment a year earlier created tough comparisons.

Online sales remained strong, with 18% of all food now sold through Sainsbury’s website, compared with 8% pre-pandemic.

Online sales were up 29% on a year ago and 142% on a two-year comparison.

The supermarket was also boosted by England’s performance in Euro 2020, with sales of beer 60% higher last Saturday than on a typical weekend.

But despite the last quarter’s performance, the supermarket sector is under pressure due to rising costs, an lorry driver shortage and takeover speculation in the wake of this weekend’s Morrisons bid.

Roberts said Sainsbury’s has not received any such approaches, although he suggested the sector is undervalued by investors.

On inflation, he said there were some signs of prices creeping up on certain products – highlighting increased soy prices and grains – but fresh food is falling in price.

Roberts also pointed out that from Tuesday, the supermarket is launching its latest salvo in a price war with discounters Aldi and Lidl, reducing prices by £50m on everyday products.

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But he admitted cost pressures were coming from supply chain issues, stating: “The impacts on freight and logistics, there are inflationary pressures there.”

Supermarkets and suppliers have reported shortages of drivers and pent-up demand causing delays. Last week, sweets maker Haribo said it was struggling to get products to the UK due to the shortage.

Roberts said certain products were missing from shelves but they were working hard on filling empty slots.

“If you go into our stores today what you would find is that we are getting products to store, but not necessarily every product.

“There are challenges throughout the supply chain. We’re working really hard with our partners and with suppliers across the wider industry and with government.”

One area of deliveries that is not struggling is Sainsbury’s on-demand service, Chop Chop, which is now available in 49 stores, offering the arrival of orders in 60 minutes.

The grocer also said it now has 230 stores offering services on Uber Eats and Deliveroo – up 42 stores compared with March.

Sainsbury’s also saw growth in sales of its Tu clothing range as more shoppers looked to buy outfits to take advantage of easing Covid-19 restrictions.

Clothes sales rose 57.6% compared with a year earlier.

Customers will also no longer need to wear masks in Sainsbury’s stores from 19 July.

Roberts said he would consult with staff on their views, but that the decision to wear one would be down to individual choice.

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“We’re all absorbing the latest news last night and thinking through our response.

“There are two very distinct points of view – one is customers and colleagues who can’t wait for the restrictions to lift and not to have to wear a mask for example, and others who are keen to continue to do that.

“I think in the end it will come down to the choices that individual customers and colleagues want to make – it is going to be driven by customer and by colleague choice.”

He added: “We’re clearly going to follow the government advice, we’ll continue to listen to our customers and colleagues and we’ll respect and support the individual choices the customers and colleagues want to make.”

Chief medical officer Chris Whitty said on Monday he would continue wearing a mask “in any situation that was indoors and was crowded, or indoors and in close proximity to other people”.

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