Sainsbury’s sees Christmas sales fall amid difficult toy and games market

Supermarket giant Sainsbury’s has revealed lower sales over its Christmas quarter as a tough toy and video games market offset a robust performance in food and clothing.

The group – which also owns the Argos chain – said like-for-like retail sales fell 0.7%, excluding fuel, in the 15 weeks to January 4.

Its performance was dragged lower by a 3.9% fall in general merchandise sales – its worst performance since the group bought Argos four years ago.

This took the shine off a 0.4% rise in sales of groceries as festive party food proved popular, with a 4.4% jump in clothing thanks to a cold weather boost for womenswear and a sell-out range of novelty Christmas jumpers.

Sainsbury’s said toys and games were the hardest hit in the general merchandise division, with both suffering double-digit declines.

It said a move to axe big toy promotions in favour of everyday lower prices compounded a tough wider market, while game sales suffered in the absence of any new console launches.

Chief executive Mike Coupe said the group saw “twin peaks” in festive trading, with strong sales around Black Friday and the week before Christmas, but “more challenging” conditions in between.

Sainsbury’s also warned that trading is set to remain “highly competitive and promotional” in 2020, with ongoing consumer uncertainty clouding the outlook.

Mr Coupe said that, despite the sales fall, he was “pleased” with the overall performance.

“In this quarter there were a couple of markets under significant pressure and they are the ones we over-trade in,” he added.

The Sainsbury’s figures mark a decline on the 0.2% sales drop seen in the previous quarter, but are an improvement on the 1.1% fall over its Christmas quarter the previous year.

Rival Morrisons updated on Tuesday, when it bemoaned “unusually challenging” trading as it posted a 1.7% sales fall for the 22 weeks to January 5.

Industry figures from Kantar Worldpanel, also on Tuesday, set the scene for a tough set of festive numbers from the big players, with a 0.2% rise over the 12 weeks to December 29 marking the slowest Christmas growth for four years.

Tesco joins Marks & Spencer and John Lewis Partnership in reporting numbers on Thursday.

In its trading update, Sainsbury’s said online grocery sales jumped 7.3% with 20% of all business made over the internet in the quarter.

Total online sales across groceries and general merchandise lifted 5% and it said Argos delivered its busiest ever online trading day on Black Friday, with 12 orders a second in the peak hour.

The figures come as Sainsbury’s looks to slash costs by £500 million in the wake of its failed attempt to merger with rival Asda.

Julie Palmer, partner at Begbies Traynor, said: “Sainsbury’s CEO Mike Coupe will be glad to see the back of 2019.

“From the failed merger with Asda and the ongoing reorganisation of Argos to its demotion to the third largest retailer in the UK, Sainsbury’s has had a stop-start year.

“That feeling will be compounded by the sluggish Christmas results to finish the year.”