Sainsbury profits to jump after bumper Christmas

Sainsbury today celebrated a strong Christmas, as customers treated themselves to party food and champagne.

Online sales doubled compared to pre-pandemic two years ago and clothing sales were up 38% on the same basis in the 16 weeks to January 8.

That allows the grocer to bump up profit forecasts for the year by £60 million to £720 million.

The shares rose 5p to 284p.

CEO Simon Roberts said: “I am really pleased with how we delivered for customers this Christmas. More people ate at home and our significant investment in value, innovation and service led to market share growth.”

He added: “The backdrop was challenging.”

Base pay for staff including those at Argos will rise to £10 an hour from March, a move that is costing Sainsbury’s £100 million.

Grocery sales were up 6.6% compared to the same period two years ago. They are down 1.1% on a year ago when consumers had much less choice about where to shop due to Covid restrictions.

All grocers are under intense pressure from the German discount giants Aldi and Lidl. Sainsbury’s is launching an Aldi Price Match campaign for the 150 fresh products that people buy most often.

Tesco reports Christmas sales tomorrow.

In 2019, Sainsbury tried to pull off a merger with Asda, a deal that was blocked by regulators on competition grounds.

Since then, Morrisons has been taken over by private equity, something the government waved through.

Big money private equity funds are interested in other grocers, though analysts say Sainsbury may not be the most vulnerable.