Clothing is a bright spot in Sainsbury's trading update

By

Sandra Halliday

Published
Jul 5, 2022

Sainsbury's, which is one of the UK's big four supermarkets and also the owner of the giant Tu clothing brand, issued a trading statement for the 16 weeks to the end of June on Tuesday and the company’s business appears to be progressing “in line with expectations”.

Not that “in line with expectations” means everything is perfect and the company also talked about sales declines in key areas.

General merchandise and clothing sales have been progressing as planned “with an improved sales trend following the first five-week period” when comparisons due to lockdowns last year were really tough.

Clothing sales were actually down down 26% in the first five weeks of the period, although they’re only down 2% in the last 11 weeks. However, clothing is a bright spot when looked at over a three-year comparison with the company now 3.9% ahead of where it was before the pandemic. And it says that this year, women's dresses, holidaywear and swimwear have “performed especially well as travel increased”.

It also said its Argos unit saw sales down 19% in the first five weeks and 7% in the last 11 weeks, while Sainsbury's own general merchandise sales were down an even bigger 30% in the first five weeks, easing to a 5% fall in the latest 11 weeks. 

But its general merchandise sales were lower against three years ago. In fact, general merchandise sales at Argos were down 4.5% on this basis and at Sainsbury's itself they were down 13.8%.

As mentioned, it’s very clear that the comparison period at the start of the 16 weeks was a difficult one. A year ago, the UK still being in lockdown meant supermarkets were among the few stores allowed to stay open so the retailer’s clothing and general merchandise sales were artificially boosted. And even after lockdowns ended, consumers stayed away from many non-essential physical shops, although they still needed to do their regular food shopping, so that would also have boosted non-food sales at Sainsbury's superstores.

Overall, the company said that its total Q1 sales grew 2.5% against last year and 8.9% on a three-year basis.

CEO Simon Roberts said its “customers are watching every penny and every pound but they also look to Sainsbury's when they want to treat themselves, particularly at special occasions. We are really connected to our customers and through strong delivery of our plan, we have outperformed the market at key events such as the Jubilee”.

CFO CHANGE

The company also said that after six years as CFO, Kevin O'Byrne has confirmed his intention to retire from Sainsbury's at the end of this financial year, in March 2023.

Bláthnaid Bergin, its Commercial and Retail Finance Director, will take over the role next year.

Sainsbury’s said O’Byrne “has played an instrumental role in developing and implementing our strategy, in particular increasing free cash flow generation, strengthening the balance sheet and reducing leverage”.

Meanwhile, Bergin joined the firm in 2019 as Group Director of Finance before moving to Commercial and Retail Finance Director in 2021. 

She “has a strong record of financial leadership and, over the last three years at Sainsbury's, has supported the development and delivery of our strategy”.