Advertisement

Sainsbury's Christmas bonanza fails to excite market

Sainsbury's may have enjoyed a record-breaking Christmas and increased its market share but investors did not share the firm's celebratory mood.

Sainsbury's may have enjoyed a record-breaking Christmas and increased its market share but investors did not share the firm's celebratory mood.

The company's shares were down 3.5% by 1030 as pessimists latched onto news that like-for-like sales growth of 0.9% in the third quarter had dropped markedly from the 1.9% rise in the previous three months.

Advertisement - Article continues below

The firm also warned its festive bonanza would probably not last into the new year.

"We expect the challenging economic backdrop to persist, with customers looking to re-balance their household budget after the festivities and so spending cautiously in the first few months of 2013," Chief Executive Justin King said.

Like-for-like sales excluding fuel were up 0.9% in the 14 weeks to January 5th, while total sales were up 3.3% (excluding fuel).

The week before Christmas was the supermarket's strongest trading week ever, with customer transactions of over 27m.

The company made a record breaking £16m of sales in one hour between 12pm and 1pm on Sunday 23rd December.

It also enjoyed its best ever Christmas Eve, at both its supermarket and convenience stores, with over £100m of sales.

However, James Grzinic, an analyst at Jefferies, said he expected a further gradual slowing in like-for-like performance.

"Sainsbury has confirmed that it expects like-for-like sales to continue at around 0.9%," he added.

"This formalises a cut to the previous view (set two months ago) that second half like-for-like growth should be broadly in-line with the 1.7% achieved in the first half".

Michael Hewson from CMC Markets said he thought the sell-off appeared "somewhat overdone" given that the slowing sales growth was set against tough comparatives from previous years.

During the quarter, the supermarket said its convenience stores had grown 17%, while online business grew 15%.

Its general merchandise and clothing ranges continued to grow at a faster rate than food, taking market share from rivals in the non-food arena.

Clothing performed particularly well, Sainsbury's said, growing at over 10% year-on-year.

Small electricals, such as toasters and kettles, rose 24% year-on-year, and cookware, grew at nearly 15% year-on-year.

Advertisement
Advertisement

Recommended

Broker safety – your questions answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
How demographics affects stock valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Do you own shares in Sirius Minerals? Here’s what you need to do now
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Why investors should be “cautiously bullish” for 2020
Stockmarkets

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020

Most Popular

What gold, bonds and tech stocks have in common
Stockmarkets

What gold, bonds and tech stocks have in common

"Risk off" or "safe haven" assets such as gold and government bonds have been doing well lately. But so have riskier tech stocks. That seems to defy c…
10 Jul 2020
An economics lesson from my barber
Inflation

An economics lesson from my barber

On reopening his shop after lockdown, Dominic Frisby’s barber doubled his prices. It’s all part of the post-Covid inflation process – and we’re going …
8 Jul 2020
Share tips of the week
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
10 Jul 2020