Sainsbury’s posts bumper sales as lockdown fuels online growth

The supermarket group said total sales jumped by 8.5% for the quarter to June 27, amid strong demand for store-cupboard essentials.

People queuing up outside Sainsburys
People queuing up outside Sainsburys

Sainsbury’s has posted bumper trading for the past quarter as digital sales more than doubled during the lockdown.

The supermarket group said total sales jumped by 8.5% for the 16 weeks to June 27, amid strong demand for store-cupboard essentials.

However, it said it expects profits to take a hit of more than £500 million due to the impact of the coronavirus pandemic, although this will be “broadly offset by business rates relief and stronger grocery sales”.

New chief executive Simon Roberts also warned investors “we do not expect the current strong sales growth to continue” as he stressed that the coming months would continue to be challenging.

Grocery sales surged 10.5% during the quarter as online grocery orders rose to 650,000 per week from 370,000 for the same period last year.

Sainsbury’s also reported a 7.2% increase in general merchandise sales as it was boosted by strong figures in its Argos business despite stores being shut for most of the quarter.

Argos sales increased by 10.7% as it was boosted by a 78% jump in home delivery sales, while click-and-collect sales increased by 53%.

Shoppers bought fewer clothes from the business during the period, with sales sliding by 26.7%.

Mr Roberts said: “The last four months have been extraordinary in so many ways and our colleagues have done an amazing job adapting our business.

“They have worked tirelessly to keep everyone safe, to help feed the nation and to support our communities and the most vulnerable in society.

“A number of the decisions we have made have materially increased costs but meant that we have done the right thing for our customers and set us up well for the future.”

Julie Palmer, partner at Begbies Traynor, said: “Simon Roberts may have only just gotten his feet under the table at Sainsbury’s, but the chief executive is facing the task of navigating the supermarket through the murky economic waters of Covid-19.

“Although grocery sales have spiked during the past few months, the increased costs retailers have had to absorb from disruptions to the supply chain and the implementation of social distancing measures have rocked the boat, with the business’s profitability taking a hit.

“However, Sainsbury’s remains in a stable position with the company’s acquisition of Argos improving its online offering, which has proven fruitful during lockdown, while the relief in business rates from the Government has eased any immediate financial pressures.”

Shares in the company moved 1.3% higher at 211.4p in early trading.

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