LONDON — Shares in supermarket Sainsbury’s have opened up over 5% in London after a forecast-beating Christmas update.
Sainsbury’s sales rose 1% in the 15 weeks to January 7, helped by a 4.1% rise at the recently acquired Argos. Sainsbury’s standalone sales rose 0.8% in the period, or 0.1% on an underlying basis.
While it may not sound like a lot, the City was expecting a slump in sales and shares have jumped at the open in response. Sainsbury’s is up almost 6.5% at 8.45 a.m. GMT (3.45 a.m. ET):
Sainsbury’s CEO Mike Coupe says in Wednesday’s update: “We had a record Christmas week, with over 30 million customer transactions at Sainsbury’s and over £1 billion of sales across the Group. Thanks to the commitment of all our colleagues, we delivered an excellent shopping experience and helped our customers live well for less over the festive period.”
But he adds: “The market remains very competitive and the impact of the devaluation of sterling remains uncertain. However, we are well placed to navigate the external environment and remain focused on delivering our strategy.”
ETX Capital’s market analyst Neil Wilson says in an email this morning: “Sainsbury’s results are positive but have to be viewed in the wider context of the market, which seems to have enjoyed a bumper Christmas. According to Kantar, supermarket sales were up 1.8% in the 12 weeks to January 1st — while not a direct comparison with Sainsbury’s results it does reflect perhaps a slight underperformance by the company.”
He adds: “It increasingly looks like Sainsbury’s is losing market share, notably to Tesco, as the latter is enjoying a rebound. Sainsbury’s did very well when Tesco and others were struggling but is now facing its own challenges. And all the sector-wide problems like falling margins and the sterling squeeze from suppliers are there, too.”
Market share data from Kantar Worldpanel released on Tuesday suggests that Tesco made big gains over Christmas. Tesco reports on its performance on Thursday. Rival supermarket Morrisons on Tuesday said it enjoyed its best Christmas trading period in seven years.