Surging sales of champagne, steaks and luxury food helped Sainsbury’s to strong growth over Christmas and new year, while discount shop B&M also reported big gains as essential retailers continued to enjoy elevated sales.
Sainsbury’s reported that like-for-like sales jumped by a stronger-than-expected 9.3% year-on-year during its Christmas period, from 1 November through to 2 January. Like-for-like sales in B&M’s UK stores rose by 21.1% in the three months to Boxing Day, and the retailer said it would give 30,000 workers an extra week’s wages.
Supermarkets have been one of the main beneficiaries of consumer spending during the coronavirus pandemic, as locked-down shoppers spent extra money on groceries that they would usually have spent elsewhere. Morrisons on Tuesday reported a big sales increase, while retail analysts Kantar said December was a record month for UK supermarkets. That has led to soaring revenues, although profits have been held back by significant extra costs involved with bringing in social distancing measures.
At the same time online sales have boomed. Sainsbury’s said its online grocery sales had increased by 128% year-on-year in the 15 weeks to 2 January. Sainsbury’s delivered 1.1m orders in the 10 days to Christmas, double the number of last year.
Sainsbury’s, which is the UK’s third biggest supermarket, raised its profit guidance, saying it now expected to make an underlying profit before tax of at least £330m in the financial year to March 2021. It was the biggest riser on the FTSE 100 on Thursday, with shares gaining more than 5% in early trading.
The profits are expected even after the supermarket belatedly pledged to pay back £410m in business rates relief given by the government at the start of the pandemic. The relief had been given on the expectation that supermarkets and other retailers would suffer, but essential shops that remained open instead reported sales increase. Sainsbury’s, B&M and a host of other retailers only pledged to pay back the relief after a public outcry.
Sainsbury’s said Premium champagne sales rose by 52%, while party food under its “Taste the Difference” premium food brand increased by 11%. The supermarket also reported a record number of steaks sold in the run-up to new year’s eve, as UK shoppers were mostly confined to their homes.
Simon Roberts, Sainsbury’s chief executive, said the company was “dealing with a lot of change and uncertainty again” during England’s third national lockdown, but added that there were opportunities for 2021.
B&M, which sells items ranging from frozen foods to plants and homewares, has been another of the most prominent beneficiaries. While the discount retailer does not sell products online, it has also benefited from the shift in spending away from non-essential shops.
The fast-expanding retailer, which has 673 UK shops and 104 in France, reported revenues of £1.4bn during its financial quarter, up 23% on the previous year. Revenues for the first nine months of its financial year have reached £3.6bn, almost a quarter up year-on-year.
B&M said it would award 30,000 workers an extra week’s wages as a bonus, while shareholders will receive a dividend payout of £200m.
Simon Arora, B&M’s chief executive, said the latest lockdown meant there were uncertainties ahead, but added that he was confident in the retailer’s cheap prices and its focus on out-of-town locations that have seen a resurgence in popularity as shoppers try to avoid crowds.