Sainsbury's sees online sales soar during lockdown

The rapid roll-out of more online shopping capacity has helped Sainsbury's to report soaring sales over the lockdown period.

Online sales have more than doubled compared with last year as consumers shopped and ate at home.

Overall, grocery sales were up 10.5%, including in-store and online shopping, but fuel and clothing sales were lower.

The second half of the year would be "challenging", said the chain's new chief executive, Simon Roberts.

"Our business has fundamentally changed," said Mr Roberts, who took over from Mike Coupe at the start of June.

"Customers are shopping very differently. The business has changed the way it works,"

Adapting to the Covid-19 pandemic meant an extra £500m in costs, as the company invested in its digital services, hired more staff and altered store layouts.

Online deliveries have increased from 7% of the chain's grocery business to 17%, while click-and-collect sales are up 13-fold, it said. Sainsbury's has added 184 click-and-collect locations during the last three months and recruited 25,000 new staff.

"A number of the decisions we have made have materially increased costs, but meant that we have done the right thing for our customers and set us up well for the future," said Mr Roberts.

Mr Roberts also predicted more constraints on customer spending later in the year, with unemployment set to rise.

"The coming weeks and months will continue to be challenging for our customers and our colleagues and we do not expect the current strong sales growth to continue," he said.

The company said pre-tax profits for the year would be in line with previous expectations.

Total sales grew 8.5% between April and June, with particularly strong demand for store-cupboard essentials, leading to restrictions on sales of some items.

Sales at Sainsbury's-owned Argos had enjoyed a boost from the hot weather, the chain said, with a rise of 10.7%, despite the majority of its stand-alone stores being closed during lockdown.

Julie Palmer, partner at Begbies Traynor, said the new chief executive now faced the task of "navigating the supermarket through the murky economic waters of covid-19".

"Although grocery sales have spiked during the past few months, the increased costs retailers have had to absorb from disruptions to the supply chain and the implementation of social distancing measures have rocked the boat, with the business's profitability taking a hit," she said.

Richard Hunter, head of markets at Interactive Investor, said Sainsbury's had demonstrated "an ability rapidly to evolve within a new environment".

"If the pandemic has marked a sustained change in consumer behaviour, Sainsbury's will be well placed to benefit. In particular, its digital capabilities and the possibility that shoppers might lean more towards the click-and-collect option in future would play directly into the group's hands," he added.