Sainsbury's profits boosted by 'record' Christmas trading

Sainsbury's profits boosted by 'record' Christmas trading

"We think it's a good performance in what of course continues to be a challenging market", Mike Coupe, chief executive officer of Sainsbury's, told CNBC Wednesday. "As a effect we expect 2017/18 underlying profit to be moderately ahead of published consensus".

It expects to achieve £80-85m of EBITDA synergies from the Argos acquisition by March 2018 - ahead of the expected £65m.

Sainsbury's did not break down the separate like-for-like sales performances of its supermarket and Argos businesses. Video games consoles such as Xbox One X and Nintendo Switch proved popular, as did mobile phones and smart audio devices. The number of collections using its fast track service, which allows customers to get their items within four hours of purchasing them, rose by 39 percent and deliveries rose by 25 percent in the three-month period.

It opened 52 Argos stores in Sainsbury's supermarkets, bringing the total to 164.

A key contributor to these results was Argos, the electricals retailer it acquired in 2016 and now has located within its stores.

Sainsbury's, the UK's second biggest supermarket group, said its general merchandise sales fell 1.4 percent in the 15 weeks to January 6, its fiscal third quarter, having fallen 1.6 percent in the previous quarter.

The group said that grocery sales were up 2.3% during the period, however its online grocery (+8.2%) and convenience (+7.2%) posted impressive sales increases.

Sales in Sainsbury's grocery division grew 2.3 per cent, boosted by the popularity of its 25p vegetable range - which capitalised on demand for the lowest prices amid rising inflation.

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The active customer base in Sainsbury's Bank increased by 8.0% year-on-year in the period, with October the company's best ever new sales month for home insurance and November the best ever month for auto insurance.

Sainsbury's reckons it still outperformed the market though despite the "challenging conditions".

The Kantar figures showed United Kingdom consumers had spent GBP1.0 billion more than the previous year, shrugging off economic worries to spend GBP1.05 billion on groceries in the three months to December, spending GBP747.0 million on December 22 alone.

Sainsbury's rival Tesco is to release its Christmas trading update on Thursday, alongside Marks & Spencer Group PLC.

Third quarter like-for-like (LFL) sales excluding fuel rose 1.1%, an improvement on the 0.6% seen in Q2.

"We delivered an excellent operational performance across the group, with great availability, strong customer satisfaction scores and our lowest level of waste ever at Christmas". Friday 22 December was the retailer's busiest day for sales and on that day Sainsbury's delivered an online grocery order to a customer every second.

Boss Mike Coupe told media the group was pleased with the performance and how online sales and premium food ranges helped boost growth: "Customers bought more Taste the Difference food than a year ago as people treated themselves and our popular 25p veg lines helped our customers live well for less".

However, the retailer added that sales in its general merchandise division, which includes Argos, fell 1.4 per cent.