Sainsbury’s notches up a rise in first-quarter sales despite bad weather

Total grocery sales lifted 4.8 per cent as the firm saw robust growth by volume, although this was the slowest growth seen for many quarters as food inflation has fallen back significantly.

Figures also out on Tuesday show food inflation is now lower than at any time since 2021, at 2.5 per cent in June, according to the British Retail Consortium (BRC)-NielsenIQ Shop Price Index.

Sainsbury’s revealed that total general merchandise sales fell 4.3 per cent, due largely to the wet early summer weather, while sales in the Argos business fell 6.2 per cent due to weaker demand for consumer electronics and gaming products.

The group said it was sticking to its guidance for underlying retail operating profits of between £1.01bn and £1.06bn for the full year, which would be growth of 5 per cent to 10 per cent.

Simon Roberts, chief executive of Sainsbury’s, said: “We are pleased with our market-beating grocery performance.

“We’ve been winning from competitors every month for 15 months, as more and more people are choosing Sainsbury’s for their big weekly shop.”

Mr Roberts said the group was also “gearing up for Wimbledon this week and England’s quarter final match on Saturday night”.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said the Argos business was an “albatross” around the supermarket’s neck.

She said: “As inflation cools, the weather worsens and tough comparisons crop up on the course, eking out the amount of growth seen last year was always a difficult ask.

“But there is a lingering Sainsbury’s specific issue in its ownership of Argos.

“Electronics aren’t faring well in this economic climate, as people prioritise the essentials.

“General merchandise is the most cyclical area of the supermarket economy to be in, so being overweight in this arena really slows you down when times get tough.

“The additional exposure offsets and hides what has been a remarkable showing for the core grocery business.”

Chris Beckett, head of equity research at Quilter Cheviot, said: “Sainsbury’s results present a mixed bag.

"It continues to build momentum in the grocery sector, achieving nearly 4.8 per cent grocery growth, which is a decent achievement in a highly competitive market.

"However, while its clothing segment has shown strength, general merchandise, particularly through Argos, has experienced a slowdown, largely due to weak seasonal trends and underperformance in consumer electronics.

“Sainsbury’s strategy, which focuses on value, innovation and quality has been effective in securing some market share gains. Despite these gains, Sainsbury’s remains considerably smaller than Tesco, and in the high-volume, low margin world of food retail, scale is a critical factor and the ingredient for success.”