Sainsbury’s has upgraded its profit outlook after reporting a 1.1% rise in like-for-like sales over the Christmas period.
The supermarket group, which also owns Argos, was lifted by growth in grocery and clothing sales though general merchandise revenues were down for the 15 weeks to 6 January, in what was described as a “challenging” market.
It appeared to mirror a trend across the sector for squeezed households to focus on essentials such as food while cutting back on presents and other non-food items.
Sainsbury’s said it remained cautious about the consumer environment but that, thanks to better than expected savings following its 2016 takeover of Argos, full year profits should be “moderately” ahead of market expectations.
Shares were up more than 2% in early trading.
Chief executive Mike Coupe said the business enjoyed a “strong Christmas week” with record sales and more than 340,000 online grocery orders, as well as “stellar growth” in Argos fast-track delivery and collection.
Mr Coupe said the company was pleased with the performance and that it saw a boost from both its premium lines and cut-price offers.
He said: “Customers bought more Taste the Difference food than last year as people treated themselves and our popular 25p veg lines helped our customers live well for less.”
Sainsbury’s did not break down the separate like-for-like sales performances of its supermarket and Argos businesses.
Image: Sainsbury’s bought Argos in 2016
But it did say that total sales for groceries were up 2.3%, helped by strong performances from online shopping and convenience stores, while clothing was up 1% and general merchandise fell 1.4%.
Mr Coupe also said that the latter two categories grew market share “in a challenging market”.
“Argos stores in Sainsbury’s supermarkets performed particularly well and Argos saw record sales across the Black Friday period.”
The trading update comes a day after rival Morrisons reported better than expected Christmas trading,
Separate industry data from Kantar Worldpanel showed shoppers spent £1bn more on grocery shopping in the last three months of 2017 compared to the year before – with Tesco seeing the best growth among the major supermarkets.
But the figures also highlighted the continued threat to the established players from German-owned discounters Aldi and Lidl, which each saw growth of 16.8%.
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Lidl said on Wednesday that it had enjoyed another record December, with sales up 16% on the same period last year though the fast-expanding chain did not publish a like-for-like comparison based on the stores that were already open in 2016.
The retailer said it shifted 600 tonnes of brussels sprouts, 17 million mince pies and more than 800,000 litres of champagne and prosecco.