Soaring sales of champagne, steaks and luxury groceries helped Sainsbury to grow strongly over Christmas and New Years, while discounter B&M also saw large gains as key retailers continued to post higher sales.
Sainsbury’s reported that Christmas like-for-like sales were up 9.3% year over year from November 1st to January 2nd. On a like-for-like basis, sales at B&M’s UK stores rose 21.1% in the three months leading up to Boxing Day, and the retailer said it would offer 30,000 workers an additional weekly wage.
Supermarkets were one of the main beneficiaries of consumer spending during the coronavirus pandemic, as banned shoppers spent extra money on groceries they would normally have spent elsewhere. Morrisons reported a sharp rise in sales on Tuesday while retail analysts Kantar said December was a record month for UK supermarkets. This has resulted in increased revenue, although profits have been curbed by significant additional costs related to the introduction of social distancing measures.
At the same time, online sales are booming. In the 15 weeks ending Jan. 2, online grocery sales were up 128% year over year, according to Sainsbury’s. Sainsbury’s delivered 1.1 million orders in the 10 days leading up to Christmas, twice as many as the previous year.
Sainsbury’s, the UK’s third largest supermarket, raised its profit forecast and now expected to achieve an underlying pre-tax profit of at least £ 330m in the financial year ended March 2021. That was the FTSE 100’s biggest gain on Thursday, with stocks rising more than 5% in early trading.
Profits are expected even after the supermarket belatedly promised to repay £ 410 million in corporate rate relief from the government at the start of the pandemic. The relief had been given with the expectation that supermarkets and other retailers would suffer, but key stores that stayed open instead reported an increase in sales. Sainsbury’s, B&M, and a number of other retailers only committed to repay the relief after a public outcry.
Sales of premium champagne rose 52%, while the price of party food under the premium food brand “Taste the Difference” rose 11%, according to Sainsbury’s. The supermarket also reported a record number of steaks being sold in the run-up to New Year’s Eve as UK buyers were largely confined to their homes.
Simon Roberts, CEO of Sainsbury, said the company was “again busy with change and uncertainty” during England’s third national lockdown, but added that there were opportunities for 2021.
B&M, which sells products from frozen foods to plants and housewares, has been a major beneficiary. While the discounter does not sell products online, it has also benefited from shifting spending away from non-essential stores.
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The fast growing retailer, with 673 UK stores and 104 in France, had sales of £ 1.4 billion for the fiscal quarter, up 23% year over year. Sales in the first nine months of the financial year were GBP 3.6 billion, almost a quarter higher than last year.
B&M said it would give 30,000 workers an additional weekly wage as a bonus, while shareholders would receive a dividend payout of £ 200 million.
Simon Arora, CEO of B&M, said the recent lockdown meant uncertainty, but added that he was convinced of the retailer’s affordable pricing and focus on out-of-town locations, which have regained popularity as shoppers try to avoid this crowds.