Sainsbury’s shares hit the highest level for nearly two years yesterday after it said roaring Christmas sales were set to boost its profits by £60million.
The Big Four supermarket said like-for-like sales jumped 9.3 per cent higher in the final three months of 2020, as Britons under lockdown splashed out on luxury food to eat at home.
It means that Sainsbury’s expects profits of £330million for the year to the end of March, up from a previous estimate of £270million.
Happy Christmas: Sainsbury’s said like-for-like sales jumped 9.3 per cent higher in the final three months of 2020, as Britons under lockdown splashed out on luxury food to eat at home
Following the update, Sainsbury’s shares rose 6.9 per cent, or 16p to 248.5p, their highest level since February 2019.
The blowout results were the latest from a major supermarket after Morrisons revealed an 8.5 per cent jump in festive sales on Tuesday.
Grocers were boosted by the November lockdown in England and tiered restrictions imposed afterwards, picking up extra trade as pubs and restaurants across the country were forced to shut their doors.
Shoppers are estimated to have spent £11.7billion on shopping in December – the highest monthly figure on record – according to data firm Kantar.
Simon Roberts, chief executive of Sainsbury’s, said: ‘The last few months have been really tough for many people and we are all dealing with a lot of change and uncertainty again.’
With pubs and restaurants closed over the festive period, Britons popped the champagne corks and treated themselves at home instead.
Many also had to change their plans suddenly – prompting a rush for Christmas staples – after government guidelines for household mixing were changed at the last minute, benefiting the big supermarkets. Sainbury’s said its grocery sales grew 7.4 per cent, including a 128 per cent rise online.
General merchandise sales rose 6 per cent, while sales at subsidiary Argos rose 8.4 per cent and clothing sales edged up 0.4 per cent.
The rise in internet shopping continued to play a major role, with Sainsbury’s saying 44 per cent of total sales were online during the period.
In the ten days leading up to Christmas, it took a record 1.1m orders. However, smaller family gatherings this year meant that people bought smaller turkeys and more lamb and beef than normal.
They still treated themselves though, with champagne sales jumping 52 per cent higher and a record number of steaks sold.
Sainsbury’s said sales of its premium ‘taste the difference’ range rose 11 per cent, while sales of mincemeat rose 24 per cent as well – a sign that more people had a go at home baking.
As a result of the strong performance, Sainsbury’s said it was increasing its underlying pre-tax profits forecast for the year to the end of March.
The figure is still due to be lower than the £586million recorded last year, however, due to the supermarket handing back £410million worth of business rates relief.
Tesco, the UK’s biggest grocer, will give its own Christmas trading update next Thursday.
The industry is expected to benefit further from the latest national lockdowns, which means that most people are again working from home and the hospitality sector is closed.
Boot’s owner said first quarter trading surpassed expectations after it was buoyed by its UK pharmacy and optician businesses.
Walgreens Boots Alliance (WBA) revealed sales increased by 5.7 per cent to £26.7billion over the three months to the end of November, while earnings fell by 11.2 per cent.
Like-for-like pharmacy sales for the quarter increased by 2.5 per cent. WBA added that the Boots.com business performed ‘very strongly’.