Sainsbury’s slips over the crucial Christmas spell as it’s dragged down by falling toy sales at Argos
- Sainsbury’s retail sales fell 0.7 per cent in the 15 weeks to 4 January
- Toy and gaming sales were ‘significantly’ lower at Argos
- Retailer warned trading is set to remain ‘highly competitive and promotional’
Sainsbury’s has revealed it saw lower sales over the Christmas quarter as a tough toy market’s toll on Argos offset growth in its core groceries business.
The group said like-for-like retail sales fell 0.7 per cent, excluding fuel, in the 15 weeks to 4 January.
Sales of groceries rose 0.4 per cent and online groceries trading lifted 7.3 per cent, while clothing jumped 4.4 per cent, but overall performance was dragged lower by a 3.9 per cent fall in general merchandise sales.
Sainsbury’s saw lower sales over the crucial Christmas quarter
Sainsbury’s said within the ‘general merchandise’ business toy and gaming sales were ‘significantly’ lower.
It cautioned that trading is set to remain ‘highly competitive and promotional’ in 2020, with ongoing consumer uncertainty also clouding the outlook.
Chief executive Mike Coupe put a positive spin on the situation. ‘We have a real sense of momentum in Sainsbury’s and investment in our stores and improvements to service and availability have led to our highest customer satisfaction scores of the year,’ he said.
‘Our digital investments are also paying off and over 20 per cent of our business was online in the quarter. Groceries Online had record order numbers throughout the Christmas period and customers are increasingly choosing to shop with SmartShop in our supermarkets.
‘Argos had its biggest digital Black Friday to date and record sales through mobile and via Argos Click and Collect. 32 million customers shopped with us across Sainsbury’s and Argos in the key Christmas week.’ Coupe added.
The Sainsbury’s figures may be down on the previous quarter, but mark an improvement on the 1.1 per cent fall seen over its Christmas quarter last year.
It comes after Morrisons on Tuesday bemoaned ‘unusually challenging’ trading as it posted a 1.7 per cent sales fall for the 22 weeks to 5 January.
Boss Mike Coupe speaks at the CBI Annual Conference in London
AJ Bell’s Russ Mould commented: ‘Looking at this update from Sainsbury’s you might be left asking if the Grinch had stolen Christmas, as weaker sales of toys and video games at Argos proved a drag on sales.
‘The brighter news is that people don’t seem to have given up on eating and drinking over the festive period and grocery sales actually nudged ahead in a very tough market.
‘In what amounts to a contest to be the best of a bad bunch, industry data shows Sainsbury’s performed least worst out of the ‘big four’ groceries firms during Christmas.
‘This represents something of a turnaround. Since acquiring Argos in 2016, the catalogue retailer has often come to the rescue of Sainsbury’s struggling supermarket operation.
‘The market will therefore hope the recent weak performance at Argos genuinely reflects the one-off factors flagged by CEO Mike Coupe, like the lack of a big gaming release, and not something more troubling with the acquisition.’