Sainsbury's raises profit forecast after enjoying record Christmas

11 January, 2018, 00:33 | Author: Regina Lloyd
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United Kingdom supermarket chain J Sainsbury PLC on Wednesday lifted its annual profit guidance after strong end to the year, with Argos delivering a particularly strong performance on Black Friday.

It appeared to mirror a trend across the sector for squeezed households to focus on essentials such as food while cutting back on presents and other non-food items.

Sainsbury's said it now expected to achieve 80-85 million pounds ($108-115 million) of earnings synergies from Argos by March 2018, ahead of previous guidance of 65 million pounds.

Sainsbury's, the UK's second biggest supermarket group, said its general merchandise sales fell 1.4 percent in the 15 weeks to January 6, its fiscal third quarter, having fallen 1.6 percent in the previous quarter.

As a effect underlying pretax profit for the full 2017-18 year would be moderately ahead of the published analysts' consensus - an underlying pretax profit of 559 million pounds ($755.77 million), down from 581 million in 2016-17.

Shares in Sainsbury's were up 1.6% at 252.30 pence in morning trade.

Mike Coupe, Sainsbury's chief executive, said: "We're pleased with our performance across the group this quarter".

Sainsbury's did not break down the separate like-for-like sales performances of its supermarket and Argos businesses. Sainsbury's opened 52 Argos stores inside supermarkets during the period, bringing the current total to 164.




However, the retailer warned that market conditions remain challenging due to an increase in inflation.

The weaker performance is Argos is in stark contrast to previous year when the catalogue retailer turbo-charged the group's Christmas sales with revenue growth of 3.7%.

The group said that grocery sales were up 2.3% during the period, however its online grocery (+8.2%) and convenience (+7.2%) posted impressive sales increases.

This was attributed to booming trading over Christmas week, with December 22 being the biggest sales day for stores and online grocery orders reportedly being delivered to customers every second.

On Wednesday discounter Lidl UK said its total sales grew 16 percent in the Christmas period.

But Sainsbury's added that sales in its general merchandise arm, which includes Argos, fell 1.4 per cent.

"We had a strong Christmas week, with record sales, over 340,000 online grocery orders and stellar growth in Argos Fast Track delivery and collection".

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