Sainsbury's today posted record Christmas trading, with online sales boosted by "stellar growth" from Argos.
Total like-for-like sales grew by 1.1 per cent, within which grocery grew by 2.3 per cent. Online groceries and convenience sales rose by 8.2 per cent and 7.3 per cent respectively.
Full-year profits are expected to be "moderately" ahead of consensus expectations, Sainsbury's said.
But chief executive Mike Coupe tempered today's announcement by stressing Sainsbury's remains locked in a "challenging market".
He added: “We’re pleased with our performance across the group this quarter. We had a strong Christmas week, with record sales, over 340,000 online grocery orders and stellar growth in Argos Fast Track delivery and collection. Online accounted for 20 per cent of the group’s sales during the quarter.
“We delivered an excellent operational performance across the Group, with great availability, strong customer satisfaction scores and our lowest level of waste ever at Christmas. Friday 22nd was our biggest sales day for stores and we also delivered an online grocery order to customers every second."
He continued: “General merchandise and clothing grew market share in a challenging market. Argos stores in Sainsbury’s supermarkets performed particularly well and Argos saw record sales across the Black Friday period."
Shares in Sainsbury's were up 2.7 per cent in early trading.
Hargreaves Lansdown senior analyst Laith Khalaf said Sainsbury's trinity of "cheap turkeys, a popular premium range, and the speedy Argos Fast Track delivery service" had helped the supermarket.
"Following the acquisition of Home Retail Group, the combination of Sainsbury’s and Argos has proved greater than the sum of its parts, and as a result, the supermarket group is lifting profit forecasts for the year," he said.
"The general merchandise that Argos sells may be a millstone around the group’s neck right now, but longer term the appeal of combining Christmas grocery and gift shopping in one location is clear to see."
He continued: "Consumers are spending less on discretionary items thanks to stagnant wages and rising inflation. Consequently general merchandise sales are going backwards at Sainsbury, though not as fast as they are in the market at large, and if the supermarket can maintain that market share when consumers loosen their purse strings again, that would bode well for shareholders."
Neil Wilson, a senior market analyst at ETX Capital, was less positive about Sainsbury's announcement today.
“Sainsbury’s delivered a decent set of Christmas numbers with like-for-like sales growth a shade ahead of market expectations, but it still seems to be underperforming competitors in terms of sales growth in its core business," he said.
Underlying profit guidance has been revised moderately higher which is a plus and may see shares jump a bit but worth noting that this is down entirely to Argos synergies being ahead of previous expectations... pressures remain and management stuck to the now de rigueur in retail updates mantra that the ‘market remains challenging’.