Sainsbury's boss Mike Coupe: Christmas 'reinforced the case' for acquiring Argos

The supermarket giant posted flat like-for-like sales during its third quarter, while Argos registered a 4% jump, driven by strong trading in technology, toys, sports and gifts.

The performance of Argos, which Sainsbury’s acquired for £1.4bn last September, meant the group’s overall like-for-like sales grew 1% in the 15 weeks to January 7.

Coupe also hailed growth in other areas of the Sainsbury’s business, including online and convenience, which jumped 9% and 6% respectively.

Revenues from the grocer’s clothing and general merchandise ranges climbed 10% and 6%, making up for what interim finance boss Ed Barker called a “slightly negative” number in sales of its core food proposition.

Coupe said: “In the areas of development for the business, in the grocery business – the growth of online, the growth of convenience stores, the growth in the categories we’ve invested in have all been pretty strong.

“If you look at the clothing and general merchandise business within Sainsbury’s, it’s a very, very strong performance relative to the market. Again that’s an area we’ve invested in over a number of years.

“But if anything, the last few weeks has reinforced the case that we made for the acquisition of Argos, with the performance of 4% like-for-like.

“That’s a very robust operational performance. The guys did a fantastic job through service and maintaining availability across the Christmas period and we now have 30 Argos shops trading in Sainsbury’s stores, which all traded pretty well over the Christmas period.

“It gave us a lot of confidence about our ability to bring the businesses together in the future.”

Off the ball?

Sainsbury’s is aiming to have 250 Argos shop-in-shops operating within Sainsbury’s supermarkets in three years’ time as it reshapes the retailer’s bricks and mortar portfolio.

But Coupe denied that the grocer has taken its eye off the ball of its core food business by ramping up efforts to integrate Argos, despite Tesco and Morrisons outperforming Sainsbury’s during 2016.

Coupe said: “You have to go back and look at the historical context. Sainsbury’s as a business has performed pretty well over the last five years.

“Broadly speaking we’ve maintained our market share over that period of time and we haven’t suffered some of the woes and traumas of at least some of our competitors.

“We have reasons to believe and we think we’ve delivered a very creditable performance in what is a very challenging market.

“We have confidence in our strategy and all of the building blocks, not just investment in food quality but also in online and the acquisition of Argos, would all point to the fact that we should have confidence in our future.”