Sainsbury’s sales were up 5.3% to £15.7 billion in the six months to 18 September. Grocery sales rose 0.8% despite tough comparatives last year when lockdowns and restrictions led to booming sales at supermarkets. Sainsbury’s said it was also winning market share.
The supermarket returned to profits in the half-year, posting a pre-tax profit of £541 million. That compared to a loss of £179 million last year and a profit of just £9 million in 2019.
The results are a vindication of the company’s strategy to refocus on food. Sainsbury’s has been launching new products - such as the recent autumn editions range featuring seasonal veg like butternut squash - and investing in driving down the cost of everyday items such as chicken, mince, and vegetables.
“We are making good progress delivering our plan to put food back at the heart of Sainsbury’s,” CEO Simon Roberts said. “We have grown market share through improving value for customers, tripling our rate of food innovation and delivering customer satisfaction ahead of our key competitors.”
Freetrade analyst Dan Lane said: “Trimming down the segment and getting back to basics seems to be doing the trick - the Aldi Price Match promo is doing its job but talk of increased market share this morning is premature. Go back to 2012 and the retailer had 17% of the market. Hovering around 15% now shouldn’t be cause for celebration.”
Sainsbury’s reiterated its target for full year pre-tax profits of £660 million. The interim dividend was held at 3.2p per share. Shares slipped 3% in early trade.
Sainsbury’s also owns Argos and Habitat. General merchandise sales, which cover these divisions, were weaker. Sales fell 5.8% with the supermarket once again blaming tough comparatives. This time last year sales of laptops and home office equipment were booming as people changed the way they worked. A hot summer also boosted sales of things like paddling pools during the period.
Sainsbury’s announced plans last November to cut 3,500 Argos jobs and close 420 stores. Roberts said today: “Our plan to transform Argos is on track, delivering significantly improved profitability.”
Supermarkets and retailers are facing one of the toughest Christmases in living memory as supply chain issues and staff shortages hit businesses. Last week Roberts wrote an open letter to customers saying there would be “plenty of food” but saying customers may have to settle for alternatives. He suggested opting for a frozen turkey over fresh.
The company said today it was “well placed” to deal with the issues and Roberts said: “Our scale, advanced cost saving programme, logistics operations and strong supplier relationships put us in a good position as we head into Christmas.”
Roberts said Sainsbury’s was gearing up for a “big Christmas” through its largest ever recruitment drive and work with suppliers to ensure availability. The supermarket has so far recruited around 8,000 of the targeted 22,000 seasonal workers needed. Roberts said he was “confident we can deliver customers a really great Christmas.”
However, some items will be in short supply. Roberts said global shortages of semi-conductors meant there would be “less stock available” of gadgets at Argos this Christmas, urging customers to buy early.
The supermarket has been the subject of takeover speculation after Asda and Morrisons both fell to private equity this year. Czech billionaire Daniel Kretinsky has this year built a 3.05% stake in Sainsbury’s, fueling chatter.