By Michael Northcott Wednesday, 09 January 2013

Bubbly saves Christmas at Sainsbury's, but sales are a tad corked

If J Sainsbury execs were hoping for a big final quarter boost, they will be disappointed with results that show the chain's sales growth was at its slowest since December 2005.

Just as you were thinking that retailers had had a strong festive season, Sainsbury’s posts like-for-like sales of 0.9% for the 14 weeks to January 5th, the smallest year-on-year growth (excluding fuel and new store openings) that the chain has seen since 2005. 

But it’s not all bad: for the week before Christmas the picture looks a whole lot rosier. Sainsbury’s said that this was its best week on record in terms of customer transaction numbers, which exceeded 27 million in just seven days. Clothing sales increased 10% and champagne and prosecco rose 15% compared with the same period the previous year. Majestic Wines shops also got a boost from prosecco over the period, so much so that the chain's boss, Steve Lewis, said: 'Prosecco is the real story with sparkling wine.' Hardly a 'no expense spared' Christmas then, eh Lewis?

Chief executive Justin King also pointed out that the figures mean Sainsbury’s has enjoyed 32 consecutive quarters of sales growth, and highlighted some impressive stats from the Christmas rush. He said: ‘We saw a record breaking £16m of sales in one hour between 12pm and 1pm on Sunday December 23 and experienced our best ever Christmas Eve, at both our supermarket and convenience stores, with over £100m of sales.’

Still, there’s no escaping the fact that when Sainsbury’s announced its Christmas results last year (for the Christmas 2011 period), it showed 2.1% sales growth; and even in the half-year results earlier this year, it showed 1.7%. Sorry King, but that’s definitely a contraction. 

But it's not as though Sainsbury's is alone on the high street. Feeling the impact of the wet weather, Greggs the baker saw sales in the five weeks to 7th January fall by 2.9% compared with a year earlier. It said that prices may increase this year because of the cost of ingredients, and blames the heavy rain and flooding for the poor sales thus far. This is the last results announcement that chief executive Ken McMeikan will have to deliver, as he revealed in December that he is leaving to join catering group Brakes, where the weather may not be as much of an issue.

King added: ‘We expect the challenging economic backdrop to persist, with customers looking to re-balance their household budget after the festivities, and so spending cautiously in the first few months of 2013.’

Will Tesco have caught up in this period? Part of the reason Sainsbury's was doing so well was because it picked up a lot of business from a poorly performing Tesco. With results out tomorrow, a key annual fixture in the supermarket wars is upon us...

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