Q3 fashion suffers at Sainsbury's amid tough comparisons
UK supermarkets giant Sainsbury’s may have enjoyed a bumper Christmas trading for festive food and drink, but there was less cheer when it came to clothing.
Better than expected demand in the grocery aisles didn’t translate elsewhere. While the Omicron wave of Covid-19 meant more people dined at home, that meant fewer trips out to restaurants and pubs and they saw little need to dress up.
Its Tu brand clothing sales in the 16 weeks to 8 January were down 2.7% year-on-year, although they did rise 2% in the final six weeks up to Christmas. The company had an advantage last year as its stores remained open while non-essential stores were hit for part of the period. However, for the same period two years ago, clothing sales were 12% higher.
Sainsbury’s noted the latest quarterly dip was partly the result of a reduction in unprofitable discounting. Full-price clothing sales were up 38% compared to two years ago, boosted by reduced markdowns and promotions.
Particular highlights this year were Christmas jumpers and matching family pyjamas, it noted.
Sales at its general merchandise Argos ops were down 16% in the three-month period, with supply chain problems hitting the availability of technology, gaming kit and toys.
But that overall Christmas strength means Sainsbury’s is set to make £60 million more in annual profits than predicted. Sainsbury’s said it now expected to make underlying profits of £720m for the year to 8 January, up from £660m, with profit expectations boosted by better than expected grocery sales, improved profit margins on non-food and lower than expected bad debts at its banking arm.
Zoe Mills, senior Retail Analyst at GlobalData, said: “While Sainsbury’s focus in its food proposition during the pandemic has been apt as consumers face rising prices elsewhere (such as in their energy bills), more attention must be given to its non-food proposition this year.”
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