Bumper Xmas for Sainsbury as shoppers cut loose

J Sainsbury today insisted it was fending off the competitive threat from Aldi and taking market share from more traditional rivals such as Morrisons.

The grocer and its sister company Argos had a strong Christmas as customers made the best of the first festive season free of Covid restrictions for several years.

Sales of champagne and prosecco hit record highs. Overall sales in the third quarter, the 16 weeks to Jan 7, rose 5.9%.

The grocer immediately said profits could now hit £690 million for the year, around £50 million ahead of City forecasts.

Sainsbury is first of the supermarkets to report Christmas trading. These figures bode well for the others.

The company said it will have free retail cash flow of £600 million, £100 million better than previously indicated. That will please the City.

Charlie Huggins, Head of Equities at Wealth Club, said:

"This is a solid performance from Sainsbury’s with the group raising its profits and cash guidance for the year, against an intensely competitive market backdrop. It seems that UK shoppers indulged in one final sales splurge in the run up to Christmas, benefitting Sainsbury’s and its peers. However, with the slowdown in consumer spending yet to really bite, it’s likely the environment will get tougher.”

Sainsbury has had a two-year price match with Aldi on 300 key goods. It just unveiled a pay rise with takes entry level pay to £11 an hour -- £11.95 in London.

CEO Simon Roberts said: “We outperformed the market for the third year running.”

Sainsbury is “making inroads on customers perceptions of value, in particular against Aldi” he added.

Argos sales rose 4.5%.

Inflation that people are seeing in grocery baskets are a lot lower than headline figures, says Roberts.