11 Jan, 2017
Sainsbury’s reports record Christmas sales
Britain’s second largest supermarket has enjoyed record Christmas sales thanks to a huge Black Friday boost from its recently-acquired Argos brand.
Sainsbury’s reported record sales over the busy Christmas period of more than £1bn across the group. The news sent shares in the chain soaring to more than 6% in early morning trading.
However, in the 15 weeks leading up to 7 January, overall like-for-like sales were relatively flat at just 0.1%. Although this still managed to beat initial analyst forecasts of a 0.8% fall in sales.
The year 2016 was marred by the intense supermarket price war amid a weak pound and rising costs of imports. However, the likes of Morrisons and now Sainsbury’s still managed to obtain positive Christmas results.
On Tuesday Morrisons reported like-for-like sales growth of 2.9%. According to Sky News, industry data suggests supermarkets have been enjoying their strongest growth for two years.
However, analysts say that supermarket chains across the UK are not out of the woods yet. "Argos pulled Sainsbury’s up by its bootstraps over the Christmas trading period, as the supermarket business failed to generate any sales growth on its own", says senior analyst for Hargraves Lansdown, Laith Khalaf.
He continued: "However against a backdrop of food deflation, flat sales are a pyrrhic victory for the supermarket, and represent an improvement on performance so far this financial year".
He concluded: "2017 promises to be a challenging year for the supermarkets, thanks to the falling pound, as they have limited scope to pass on the higher cost of imported food to customers in such a competitive environment. This currency crunch is likely to put pressure on margins, and profits".
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