Sainsbury’s hikes profits guidance after Christmas sales boom

Customers flocking to supermarkets after having to change Christmas dinner plans last minute when new lockdown restrictions came in, has helped sales to soar at Sainsbury’s.

The FTSE 100 chain has upped its full-year profits guidance to at least £330 million from £270 million after a strong third quarter that saw comparable sales, excluding fuel, jump 8.6%.

The grocer saw demand heighten as other parts of the high street had to close, including for another lockdown in November, followed by Tier 4 rules being introduced in London last month,  where the retailer has numerous stores.  

Sainsbury’s is classified as an ‘essential’ retailer so has been allowed to remain open throughout the pandemic.

Simon Roberts, chief executive of Sainsbury’s, said: "Many customers had to change their Christmas plans at the last minute and we sold smaller turkeys and more lamb and beef than normal. While people had smaller gatherings, they still treated themselves.”

Premium champagne sales surged, and customers wanting New Year's Eve at home to feel special led to record sales of steaks for the retailer.

Roberts added: "More customers bought their food online than ever before and we delivered 1.1 million orders in the ten days to Christmas, double the number of last year.”

At Argos, which Sainsbury’s acquired  in a £1.4 billion takeover in 2016, sales improved 8%.

Sainsbury’s said: “The impact of the pandemic on sales, colleagues and costs adds additional uncertainty to our financial outlook for the remainder of the year.”

However it still predicts better than expected underlying pre-tax profits of at least £330 million for the year to March. That compares to £586 million in the prior year.

The new guidance today is after the impact of forgoing £410 million of business rates relief which the company recently said it will return to the government. 

The company, which in November revealed plans for a restructure, including plans to permanently close its meat, fish and deli counters as well as a number of Argos stores, is among retailers given a business rates holiday during the virus crisis.

However grocers had faced criticism for taking the support while seeing high customer demand during the pandemic and paying out dividends to shareholders.