Sainsbury’s claims ‘record-breaking’ Christmas despite sales slowing

Sainsbury’s is to ramp up use of Brand Match, Live Well for Less and Nectar marketing initiatives in 2013 despite reporting a slowdown in sales growth over Christmas.

Sainsbury's
Sainsbury’s outperforms market over Christmas but sales growth slows down.

The supermarket posted a 1.5 per cent rise in same store sales over the Christmas period, 0.9 per cent excluding fuel. Total sales increased 3.3 per cent over the three month period to 5 January.

The figures mark a slowdown from last Christmas when it reported a 2.1 per cent rise and the first half of its financial year when the supermarket reported 1.7 per cent growth.

Sainsbury’s says its own brand ranges are growing at three times the rate of branded products and that almost a third (60 per cent) of general merchandise orders were made through click and collect.

The supermarket’s investment in own brand ranges has helped to improve customer perceptions of its value and appeal to a wider range of customers, say analysts.

CEO Justin King says the final week before Christmas was the chain’s “strongest week ever” exceeding 27 million customer transactions in the week, £16m of sales in one hour on Saturday 23 December and a record 200,000 food orders delivered.

Customers also redeemed more than £110m worth of Nectar loyalty points during the period, it adds.

King says: “We expect the challenging economic backdrop to persist, with customers looking to re-balance their household budget after the festivities and so spending cautiously in the first few months of 2013. By continuing to help our customers to Live Well for Less through our ongoing commitment to great food, Brand Match, competitive pricing and targeted promotions via Nectar and coupon-at-till we are positioned to perform well over the next quarter.”

Analysts noted growth in the previous quarter was boosted by marketing activity around its sponsorship of the Paralympic Games. They also noted a slowdown in online sales growth to 15 per cent during the quarter from around 20 per cent in the previous.

The deceleration in Sainsbury’s performance is likely to be a result of improving momentum at rival Tesco, according to Clive Black, head of research at Shore Capital. The latter’s recovery from its struggles in 2012 is also likely to negatively impact Sainsbury’sin 2013, he says.

The results follow Kantar Worldpanel grocery sector data yesterday (8 January) that showed Sainsbury’s was the only one of the big four supermarkets – also including Tesco, Asda and Morrisons – to register sales growth in the three months to 23 December.

Tesco is due to report on its Christmas trading on Thursday. Morrisons reported a 2 per cent fall in sales over the festive period earlier this week.

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