Sainsbury’s says Habitat continues to grow market share

Supermarket group Sainsbury’s has reported a growth in overall sales while furniture brand Habitat gained market share across multiple homeware categories.

According to its Preliminary Results for the 52 weeks ended 4 March 2023, total sales were up 5.3% to £31.4bn from £29.8bn, with underlying profit before tax of £690m, down 5% and at the top end of its £630m to £690m guidance range.

The year-on-year decline reflects annualisation of COVID-19 driven grocery volume, investment in the customer proposition and operating cost inflation, partially offset by operating cost savings and lower finance charges.

Argos sales were up 0.1%, driven by a strong fourth quarter growth of 9.3%, while overall General Merchandise sales, which includes furniture brand Habitat, were down 0.4% on last year to £6bn, despite a positive Q4 performance of 7.6% growth.

Sainsbury’s said that it transformed the Argos sales and cost base, making the business considerably more profitable and more competitive than pre-pandemic, while also gaining market share in a weak general merchandise market.

As for Habitat, the group launched more Habitat partnerships with third-party designers and delivered value market share gains in a number of homeware categories.

“Habitat is performing well against a challenging General Merchandise backdrop and we have gained value market share in a number of homeware categories including bedding and decorations. We are working with third-party designers including Sanderson Design Group to offer more choice to customers and have launched a one-off range with Kew Botanical Gardens for the summer,” the group said.

During the period, two standalone Argos stores were opened alongside 24 new Argos stores in Sainsbury’s while 45 standalone Argos stores were closed, in line with its Argos transformation plan. The number of Argos collection points in Sainsbury’s stores increased from 335 to 420. As at 4 March 2023, Argos had 709 stores including 424 stores in Sainsbury’s.

“We expect to open around 30 Argos stores inside Sainsbury’s and close around 100 Argos standalone stores, including 34 stores in Ireland. In the UK, we expect the standalone Argos store estate will reduce to around 180 stores by March 2024, while we expect to have 430-460 Argos stores inside Sainsbury’s supermarkets as well as 450-500 collection points. We had previously guided to around 160 standalone Argos stores by this date. This change reflects further progress in rent negotiations,” the group added.

Simon Roberts, Chief Executive of J Sainsbury plc, commented: “We really get how tough life is for so many households right now which is why we are absolutely determined to battle inflation for our customers. Our focus on value has never been greater and we have spent over £560 million keeping our prices low over the last two years. As a result, we are now the best value compared to our competitors that we have been in many years and we are delivering improved market share performance in Sainsbury’s and Argos.

“We are two years into our plan to put food back at the heart of Sainsbury’s and have focused our efforts on reducing costs right across the business, which has enabled us to make the right decisions for our colleagues and customers. At the same time, we have improved the performance and profitability of Argos, Tu, Nectar and Financial Services so that we can invest further in the areas that customers and colleagues care about most.

“Our colleagues do a fantastic job serving our customers every day and we know that they are also dealing with the impact of the rising cost of living. That’s why, over the last 12 months, we took the decision to invest £225 million in supporting colleagues including raising colleague pay three times, becoming the first major supermarket to pay our people the Living Wage across the whole country and providing free food at work and increased colleague discount. The results we have achieved this year are testament to the outstanding contribution across our entire team. I want to thank every one of my colleagues for their dedication and hard work.

“We continue to work closely with our suppliers and farmers and I am grateful for their support in what has been another difficult year for food supply chains. We know just how vital the agriculture industry is not only to Sainsbury’s, but to the country as a whole and this is why we have made the choice to give £66 million of additional support to British farmers over the last year.

“We made these very deliberate decisions and investments because they make our business stronger, but more importantly because they are simply the right thing to do. While there is still much to be done and there is no doubt that the year ahead will remain challenging, I’m confident we will continue to deliver for our customers, colleagues, communities and shareholders.”

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