Page last updated at 10:16 GMT, Thursday, 8 January 2009

Festive trade cheers Sainsbury's

Justin King: "We've been doing a great job for customers"

Sainsbury's has said it enjoyed its "best ever Christmas performance" after recording strong sales growth in the last three months of 2008.

In the 13 weeks to 3 January, the supermarket group saw like-for-like sales, excluding petrol, rise by 4.5% from a year earlier.

Sainsbury's added that 23 December was its busiest trading day to date.

Trading was helped by a huge increase in demand for its "basics" range, which saw sales rise 40% from a year ago.

Total sales, which includes new store openings, were up 5.3% compared with the same period a year before.

Sainsbury's has 509 supermarkets, 276 smaller convenience store outlets and employs 150,000 people.

'Good progress'

Despite the better-than-expected trading performance, Sainsbury's chief executive Justin King said the economic environment remained "particularly challenging", and that this was expected to continue in 2009.

Concerns still persist that a highly vulnerable UK economy leaves Sainsbury more exposed than rivals such as Tesco
Keith Bowman, Hargreaves Lansdown Stockbrokers

The firm said its online sales had risen by 27% during the quarter, helped by a record number of orders in the week before Christmas.

Sainsbury's also said that it had enjoyed "good" growth in its non-food business.

It said it was "delighted" with sales of Tu, its own-brand clothing range, and said it was now the eighth-largest retailer by volume in the UK clothing market, with a share of 2.3%.

"Sainsbury appears to be gauging the mood of UK consumers extremely well," said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.

"The group is capitalising on its perceived offering of quality products, combining aggressive pricing promotions in hope of capturing consumers' desire to 'feel good' in the face of an economic downturn whilst reducing expenditure."

However, Mr Bowman added that there were worries that price-cutting promotions could hit profit margins.

And he added: "Concerns still persist that a highly vulnerable UK economy leaves Sainsbury more exposed than rivals such as Tesco, with its international portfolio."

Mixed picture

Sainsbury's is the first of the major supermarket chains to report its trading in the run-up to Christmas.

Updates from other retailers have suggested that trading over the festive season was not as bad as some had expected.

This week, Marks and Spencer, Next and Debenhams have all reported a fall in like-for-like sales over the festive period, but the declines were not as bad as had been feared by some.

More retailers issued their Christmas trading updates on Thursday:

  • Discount fashion retailer Peacocks said like-for-like sales for the two weeks to 3 January had jumped by 22% from a year ago, and announced plans to open up to 50 new stores over the next two years creating up to 750 jobs. The privately-owned chain already has 526 stores

  • • Department store group House of Fraser said like-for-like sales had fallen 1.5% in the five weeks to 3 January, but added that its profit had increased over the festive period

    • Fashion brand Ted Baker said total sales from 1 November to 24 December had risen by 7.2% from a year ago, but said it expected full-year profit to be at the lower end of market expectations

    • Wine warehouse chain Majestic Wine said UK like-for-like sales had dropped 2.9% in the 10 weeks to 5 January, with champagne sales falling.



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