Sainsbury’s is an overall Christmas winner but fashion still struggled

Sainsbury’s is an overall Christmas winner but fashion still struggled

UK supermarkets giant Sainsbury’s had a strong Christmas, with the company on Wednesday updating on trading for its third quarter (the 16 weeks to 6 January). Unfortunately, fashion wasn’t part of that outperformance, although it did “regain some momentum”.

Tu Clothing

Sainsbury’s is one of the biggest fashion retailers in the UK via its Tu Clothing offer that it sells online and in its stores. It has also been expanding its fashion operations in recent periods, adding more brands.

But the retailer’s Q3 strength was all about grocery. It said Q3 Grocery division sales were up 9.3%, while Christmas Grocery sales were up 8.6%, with stronger volume growth offsetting lower inflation.

Quarterly Clothing division sales were down 1.7%, and Christmas Clothing sales were down an even worse 6%. Its sales have now fallen in every single quarter this financial year, although at least the 1.7% drop this time wasn’t as bad as the 14.6% fall in Q2 or even the 3.7% drop in Q1, hence the point about Clothing getting some of its buzz back.

As mentioned, the company said Tu Clothing “regained some momentum in a market that remains highly promotional, partially reflecting unseasonably warm weather, particularly over Christmas”.

It was helped by partywear and family Christmas pyjamas being popular with customers. Those pyjamas were something of a hit across the mass market in the UK for the Christmas period with other retailers (such as Primark and Asda) also diving deep into this sub category.

Sainsbury’s is also a big name in General Merchandise, both through its own brand offer and its ownership of the Argos retail brand. While sales in this division were down 0.6% in Q3, they were up 1.5% excluding impact of its Argos closure in the Republic of Ireland.

Specific Christmas GM sales fell 3.7%, or 1.3% excluding the impact of that Irish Argos closure.

Overall though, Sainsbury’s said “Argos outperformed” a highly promotional GM market over the quarter as customers “chose [it] for desirable brands, impactful deals, strong availability and convenience”. And it highlighted how comparisons were tough given the one-off boosts GM received a year ago. It said “sales were weaker ahead of Christmas against an exceptional performance last year when we benefited significantly from the postal strike and from strong demand for energy-saving products”.

The company “performed strongly over the Black Friday period with customers looking to buy earlier for Christmas, particularly in [the] Furniture, Electronics and Toys categories”.

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