Sainsbury’s, the UK’s second largest supermarket chain, has announced a 5% increase in food sales during the first half of the year, reflecting growing market share and increased demand for its premium range, ‘Taste the Difference’.
This growth has made Sainsbury’s one of the best performers in the British grocery market, with a market share of 15.2%, just behind Tesco.
CEO Simon Roberts attributed the strong food sales to changing consumer habits, with more customers choosing to eat at home and treat themselves. “We are seeing the largest market share gains in the industry, with continued strong growth in volume,” Roberts said, noting that shoppers are spending more on higher-quality products as the cost of dining out rises.
The company has focused heavily on food, investing in Aldi’s price-matching scheme, launching 600 new products in its convenience stores, and boosting loyalty through Nectar prices. Roberts estimated that 25% of Sainsbury’s weekly shoppers are new customers, suggesting these initiatives are paying off.
Despite a strong performance in the grocery business, the group faced headwinds from the struggling Argos division. Argos’ sales fell 5% in the six months to September 14, with unseasonal summer weather, consumer wariness about expensive purchases, and challenges in online traffic hitting its sales. Sainsbury’s responded with promotional activities and discounts, which helped improve Argos’ performance in the latter part of the half-year period.
Total retail sales, excluding fuel, rose to £16.3bn, up 3.1% from £15.8bn last year. Pre-tax profits rose 4.7% to £356 million, while statutory pre-tax profits, excluding discontinued operations, fell 52% to £131 million due to planned investment of £27 million across the business.
To address fluctuating demand, Sainsbury’s has also invested in artificial intelligence and automation with Blue Yonder, a platform that predicts product requirements for each store, helping to reduce food waste and ensure better stock availability.
Roberts called on the government to pay attention to the concerns of British farmers, who may face challenges due to recent changes in inheritance tax on agricultural assets. He urged cooperation to maintain a productive food system and ensure the resilience of British farmers in an evolving landscape.
Looking ahead to the festive season, Sainsbury’s is optimistic, with early Christmas sales and strong food orders setting a positive tone. The company expects underlying operating profits of between £1.01bn and £1.06bn for the full year, and expects growth of 5-10%.
Clive Black, analyst at Shore Capital, praised Sainsbury’s progress, saying: “Sainsbury’s has measurably improved its core value credentials and this is starting to be reflected in customer satisfaction.”
Sainsbury’s shares closed 4.1% lower at 256¾ points, as weak revenues at Argos weighed on the company’s overall first-half performance. Despite the early challenges, Sainsbury’s expects a stronger performance for Argos in the second half, driven by festive shopping and Black Friday promotions.
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