There had been a record week of trading for the U.K. grocer Sainsbury’s this Christmas week and there had been “excellent” operations throughout the entire group, the company said.
“We think it’s a good performance in what of course continues to be a challenging market,” Mike Coupe, chief executive officer of Sainsbury’s, said during a TV interview on Wednesday.
Including the period for Christmas sale, there was a 1.1 percent increase in the like-for-like sales in the third quarter for the second largest U.K. grocer. According to Reuters, the average consensus growth rate of market experts was pegged at 0.9 percent.
Sainsbury’s had acquired the electricals retailer Argos in 2016 and now the products of the brand are located within the Sainsbury’s stores and this brand contributed heavily towards the good results of the company. In the three-month period, there was a rise of 39 per cent in number of collections using the fast track service of Sainsbury’s and a 25 per cent rise in deliveries. The fast track service is one where customers are delivered the products purchased within a period of just four hours from the time of purchase.
The last few days leading up to Christmas and Black Friday were the periods that such services “were particularly popular”, Sainsbury’s said in a statement.
“We are actually over-delivering against the synergies that we promised the markets when we actually acquired the Argos business,” Coupe said.
“The Argos business really sets us up for our future, because one of the big stories of this Christmas is how much more growth has been online and as we see here today something like 20 percent of Sainsbury’s sales are now online, a big part of that is Argos,” he added.
However, because of the rise in rates of inflation, there was challenges in the market condition, the retailer warned.
“We’ve seen a rise in inflation in the U.K. over the last year or so on the back of the Brexit vote and on the back of the devaluation of the pound and that means that customers’ disposable income has, at its best, flattened and probably slightly declining and that has an effect on deferral purchases,” Coupe explained.
The CEO further said that the company would undertake strategies to the greatest extent possible to soften the impact of the higher prices due o t higher rates of inflation on the customers even as he claimed that the company so far has restricted the impact to itself and had not passed it over on to the customers.
“We are, broadly speaking, covering the cost of inflation in our business with our own efficiency initiatives,” he said.
The company anticipates that it would be able to increase shareholder dividends slightly year-after-year, Coupe also told said.
(Adapted from CNBC.com)