Fashion is star category at Sainsbury’s, Argos also strong in Q3

By

Sandra Halliday

Published
Jan 11, 2017

UK supermarket giant Sainsbury’s now owns Argos and has been reporting rising clothing sales. Did this help it prosper in Q3? Well it certainly seems so with both fashion and general merchandise among the top performing parts of the business in the quarter.

It said Wednesday that in the 15 weeks to January 7 its Tu clothing brand rose as much as 10% with general merchandise seeing lower growth, but at 3% it still outpaced growth at the company as a whole.

Sainsbury’s has been turning in consistently good results for its Tu range in recent years and this is helping to become a significant name in UK fashion sales, as well as boosting its ambitions to be seen as more than just a supermarket.

And its non-food offer’s importance is clear given the slower growth in other parts of the business. The company said total retail sales edged up 0.8% in Q3, excluding fuel, at its namesake supermarket chain, with comparable retail sales up just 0.1%.

Meanwhile, total retail sales at general merchandise chain Argos, which it bought last year, rose 4.1%, with comparable sales up 4%.

The combined company, which CEO Mike Coupe said had a “record Christmas week”, saw a surge in online sales, particularly at Argos, with e-sales making up 18% of total group turnover in the quarter. At Argos alone, e-sales grew 13% and now account for 57% of the retail brand’s total sales.

Argos had a good Black Friday and Christmas trading period and Coupe said that the Argos digital stores in Sainsbury’s supermarkets are performing well, as awareness of the
one-stop-shop offer grows. There are now 30 Argos digital stores.

The brand delivered strong sales growth in technology categories (including wearable tech, mobile phones, computers, TV and audio), plus toys, sports and gifts.

The ongoing integration plan for Argos that has seen the firm installing more digital collection points also appears to be boosting the Sainsbury’s fashion offer. The company has added over 200 digital in-store collection points where customers can pick up their Argos purchases as well as online orders of the fast-growing Sainsbury’s Tu Clothing range.

But Mike Coupe added that “the market remains very competitive and the impact of the devaluation of sterling remains uncertain.”