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Sainsbury’s benefits from stay-at-home Christmas orders


J Sainsbury PLC (LON:SBRY) reported a strong Christmas performance after the UK was told to stay home and avoid travelling to meet relatives over the festivities.

Underlying profit before tax forecasts for the financial year to end-March were upgraded to GBP330mln from GBP270mln, after forgoing business rates relief of GBP410mln, the FTSE 100 firm said, compared to profits of GBP586mln posted a year ago.

READ: J Sainsbury joins Tesco in risking reputation over dividend stance

In the nine weeks to January 2, sales jumped 9%, with total third-quarter sales also up 9% excluding fuel.

Many customers had to change their Christmas plans at the last minute so the grocer sold smaller turkeys and more lamb and beef than normal.

However, more people took the opportunity to treat themselves to the grocer’s premium ‘Taste the Difference’ product line, which saw sales rising 11%, with premium champagne sales up 52% and steaks hitting record numbers.

Online groceries rocketed 128% as more customers accessed the e-commerce platform, with 1.1mln orders delivered over the ten days to Christmas, double the number of last year.

Sales from the Argos general merchandise business were up 8%, with home delivery and click & collect beating expectations for Black Friday and Christmas.

Clothing sales remained flat, but gross margins benefited from better than anticipated full price sales, driven by customers shopping earlier for Christmas and changes to the Black Friday trading strategy.

“For Sainsbury, which operates in a fiercely competitive arena, the outlook will remain challenging, particularly given the pressure on pricing which the sector demands,” said Richard Hunter at interactive investor.

“There will also be significant costs arising from the redefinition of the business in the form of the overhaul of the Argos store estate and the extension to its convenience store format in the shape of its new ‘Neighbourhood Hub’.”

Shares rose 4% to 241.7p on Thursday morning.

–Adds analyst comment, shares–

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