In a mixed performance for the UK’s second-largest grocer, Sainsbury’s has reported a fall in sales at its Argos chain, while its supermarket division saw a 3.4% increase in like-for-like sales over the crucial Christmas quarter.
The company has attributed the Argos downturn to “significant headwinds” from weak consumer confidence, intense online competition, and widespread discounting across the general merchandise market. Despite selling more items, Argos saw total sales decline by 2.2% in the final six weeks of the year, compared to a 4.6% rise for Sainsbury’s supermarkets.
Simon Roberts, Sainsbury’s Chief Executive, highlighted the challenges faced by traditional retailers, with online competitors such as Temu and Shein putting significant pressure on the market. Roberts called on the government to accelerate plans to crack down on tax breaks exploited by overseas-based online sellers, which he believes are distorting the playing field.
However, the supermarket chain’s performance in its core grocery business provided a bright spot, with sales of fresh foods rising by 8% and its premium Taste the Difference range increasing by 15%. Roberts said the company had “smashed this Christmas out of the park” on groceries, benefiting from shoppers’ focus on value, quality, and loyalty programmes.
Despite the weaker general merchandise market, Sainsbury’s expects to deliver retail underlying operating profit of more than £1 billion for the full year. The company also plans to return over £800 million to shareholders, including a £250 million special dividend.
Looking ahead, Roberts expressed cautious optimism, noting that food inflation may have peaked as commodity prices have stabilised and labour cost increases have become more manageable. However, he acknowledged that shoppers are likely to remain price-conscious in the face of ongoing economic pressures.
The mixed performance at Sainsbury’s has fuelled speculation about the future of its Argos division, which was the target of an approach from the Chinese group JD.com last year. Roberts, however, remained focused on the group’s overall strategy, stating that the strong supermarket sales meant the company was still on track to meet its profit expectations.
