Sainsbury’s posts strong grocery sales but sees weather hit to non-food ranges

Supermarket Sainsbury’s has notched up a rise in first-quarter sales as solid grocery trading offset a hit from poor early summer weather on its general merchandise and clothing businesses.

The chain reported a 3% rise in like-for-like sales, excluding fuel, in the 16 weeks to June 22, stripping out the closure of its Argos business in Ireland.

Total grocery sales lifted 4.8% as the firm saw robust growth by volume, although this was the slowest growth seen for many quarters as food inflation has fallen back significantly.

Figures also out on Tuesday show food inflation is now lower than at any time since 2021, at 2.5% in June, according to the British Retail Consortium (BRC)-NielsenIQ Shop Price Index.

Sainsbury’s revealed that total general merchandise sales fell 4.3% due largely to a blow from unseasonal early summer weather while sales in the Argos business fell 6.2% due to weaker demand for consumer electronics and gaming products.

The group said it was sticking to its guidance for underlying retail operating profits of between £1.01 billion and £1.06 billion for the full year, which would be growth of 5% to 10%.

Simon Roberts, chief executive of Sainsbury’s, said: “We are pleased with our market-beating grocery performance.

“We’ve been winning from competitors every month for 15 months, as more and more people are choosing Sainsbury’s for their big weekly shop.”

Mr Roberts said the group was also “gearing up for Wimbledon this week and England’s quarter final match on Saturday night”.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said the Argos business was an “albatross” around the supermarket’s neck.

She said: “As inflation cools, the weather worsens and tough comparisons crop up on the course, eking out the amount of growth seen last year was always a difficult ask.

“But there is a lingering Sainsbury’s specific issue in its ownership of Argos.

“Electronics aren’t faring well in this economic climate, as people prioritise the essentials.

“General merchandise is the most cyclical area of the supermarket economy to be in, so being overweight in this arena really slows you down when times get tough.

“The additional exposure offsets and hides what has been a remarkable showing for the core grocery business.”