Sainsbury’s defies inflationary gloom to deliver ‘best possible Christmas’

For the 16 weeks to January 7, the grocery giant reported a 5.2% increase in sales excluding fuel and like-for-like sales up 5.9% – which reflected inflation and resilient volume trends. 

Sainsbury’s grocery sales for the quarter were up 5.6%, while general merchandise sales growth was “stronger than expected” up 4.6%. Over the Christmas period specifically, overall and grocery sales were both up 7.1%, general merchandise sales jumped 7.4% and clothing was up 5.1%.

As a result of this, Sainsbury’s said it now expects full-year profits to top the upper end of its guidance range of between £630m and £690m. Retail cash flow is also expected to be around £600m, well ahead of the previously forecast £500m. 

In terms of the outlook for 2023, the retailer said it would benefit from finance costs being £15m lower than previously forecast, although this will be “broadly offset” by the cost of a significant staff pay increase ahead of the year-end annual pay review.

Sainsbury’s also flagged that it would remain “cautious” of the consumer backdrop heading into the new year. 

Chief executive Simon Roberts said: “We delivered the best possible Christmas for customers as millions of households managed their budgets differently, hosting larger gatherings again and treating themselves at home.

“Customers shopped early, buying Christmas treats and fizz more than once and looked for deals, taking advantage of Black Friday and other seasonal offers. Argos offered great value and quality and, as train and postal strikes disrupted the country, customers appreciated its reliability and convenience. 

“We prioritised keeping our prices low and giving our customers great value at Christmas. We went bold on the traditional fresh turkey roast dinner with all the trimmings and dessert, which was the best value in the market at under £4 per head.

“Sales were also boosted by the World Cup as people celebrated more at home. Our determined focus on delivering the best value alongside new and exciting festive food plus outstanding customer service and availability meant we delivered record sales, and market outperformance at both Sainsbury’s and Argos.

“We understand money will be exceptionally tight this year, particularly as many people wait for Christmas bills to land. We are working together with our suppliers to battle cost inflation and we’re keeping prices low again this year with our biggest value campaign yet in January, price-matching Aldi on around 300 of our most popular products.

“Finally, a huge thank you to all my colleagues who really do make the difference for our customers. We announced a market-leading pay rise for our front-line colleagues last week to £11 per hour (£11.95 in London) and an additional six months of free food in stores and depots. I am hugely grateful to all our team and suppliers for their hard work and support in delivering these results.” 

• Don’t miss the best of the week – sign up to receive the Editor’s Choice every Friday