Home Business Weekly Shop Becomes Style Slot For Sainsbury’s Shoppers With A Surge In Clothing Sales

Weekly Shop Becomes Style Slot For Sainsbury’s Shoppers With A Surge In Clothing Sales

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  • J Sainsbury plc (LON:SBRY)’s first quarter like-for-like sales up 1.6% (excl. fuel).
  • Total retail sales up 1.6% (excl. fuel), two-year growth 10.3%.
  • Grocery sales up 0.8%, two-year growth 11.3%.
  • Groceries Online sales up 29%, two-year growth 142%.
  • General Merchandise sales down 1.4%, two-year growth 5.%.
  • Clothing sales up 57.6%, two-year growth 15.5%.

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Surge In Clothing Sales At Sainsbury’s

"The weekly shop has become a style slot for Sainsbury’s shoppers with a surge in clothing sales at the grocer. You might have thought that after months of being only able to browse the clothing aisles of supermarkets, customers would have sought shops elsewhere for inspiration. Instead those wanting a fashion fix have clearly stayed faithful, piling TU ranges high in trollies, with sales up 57% over the 16 week period.

Gaining customer loyalty has been the name of the game for Sainsbury’s and it’s paying off.  The company is winning market share, and crucially hanging onto new shoppers who tried out the delivery services for the first time during the pandemic. Investment in its online platform continues to pay off with sales up 29 % year on year during the quarter and up 142 % on a two-year basis.

The grocery sector is still benefiting from more in-home dining due to ongoing social restrictions and this trend is tailing off as social restrictions are lifting, so the past year will be a tough act to follow for Sainsbury’s. Even so it’s upped its underlying profits forecasts for the full year to £660 million.

Price War Is Heating Up

General merchandise sales were better than expected but still lower than last year’s higher levels, where the grocer benefited from being a non-essential retailer. Argos sales were a weak spot, down 3.7% year on year, after customers brought forward purchases during the pandemic. Getting hold of the right stock in the quantities needed due to supply chain issues is an ongoing headache which isn’t going to ease any time soon.

The price war is also heating up among the big four in competition with discounter Aldi and Lidl. Sainsbury’s says it’s well armed for the fight, re-investing some profits to lower prices in home wear and summer food ranges in particular, but this is likely to eat into margins. Expanding the number of products on the shelves to give the chain the edge on choice is another way it aims to keep customers coming through the doors.

The grocer has a laser sharp focus on improving the in-store experience, and its tie up with the Carluccio’s brand in trialling franchise coffee shops in store is part of that strategy. The grocer wants to make going to the supermarket, a scratch for every itch, and it’s making good progress in satisfying that need."

Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown

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