Sainsbury's Christmas sales rise despite smaller turkeys

Supermarket giant Sainsbury's has reported a bumper Christmas, with sales up 9.3% for the festive trading period.

More customers bought their food online than ever before, it said.

In the 10 days leading up to Christmas, it delivered 1.1 million online orders, twice last year's number.

"Many customers had to change their Christmas plans at the last minute and we sold smaller turkeys and more lamb and beef than normal," said chief executive Simon Roberts.

Sainsbury's Christmas trading period covered the nine weeks from 1 November 2020 to 2 January 2021.

For the 15 weeks to 2 January, like-for-like sales, which strip out the impact of new store openings, were up 8.6%.

"We now expect, after forgoing business rates relief of £410m, to report underlying profit before tax of at least £330m in the financial year to March 2021," the supermarket said.

That is down from the previous year's figure of £586m.

Sainsbury's has delivered bumper festive sales. It's invested heavily in boosting online capacity to keep up with the soaring demand.

Supermarkets have struggled to make money from doing online deliveries, but Sainsbury's says its operation has become more efficient and profitability has improved. As volumes have increased, there are more orders in every van delivering to a smaller radius of customers.

Click-and-collect is a lot cheaper to do than home deliveries. And this accounted for about a quarter of online sales in the final week.

Argos generated more than half its sales from online well before the pandemic. More than 300 Argos counters are now inside Sainsbury's supermarkets, making it easy for people to pick up goods and gifts. Its fast-track delivery service can deliver to customers' homes and collection points within hours and this has seen growth of 62%.

This is a business that's been well placed to benefit from the huge shift to digital this Christmas.

Christmas and New Year celebrations were constrained by coronavirus restrictions, which limited the number of people and households allowed to meet up.

Sainsbury's said that while people had smaller gatherings, they still treated themselves, with sales of the supermarket's premium Taste the Difference range up 11%.

Premium champagne sales were up 52%, it added, echoing similar findings by rival Morrisons.

"People did more home baking than usual, with mincemeat sales up 24%. Customers still wanted New Year's Eve at home to feel special and we sold a record number of steaks," Sainsbury's said.

Sales of groceries, general merchandise and clothing were stronger than expected throughout the quarter, particularly since the start of England's second national lockdown, it added.

Clothing benefited from better-than-anticipated full-price sales, driven by customers shopping earlier for Christmas and changes to the supermarket's Black Friday trading strategy.

Separate figures issued by discount retailer B&M indicated that it too had a good Christmas, with like-for-like revenues at its UK stores up 21.1% year-on-year in the 13 weeks to 26 December.

"With our combination of exceptional value and convenient out-of-town locations, we are confident that our business model will prove highly relevant to the needs of customers in 2021," said chief executive Simon Arora.