Sainsbury's grows clothing market share as fashion edges up in festive quarter
J Sainsbury’s festive trading season may have been mainly about extra food and drink sales but, surprisingly, it also managed to report an increase in clothing sales.
The supermarket chain is one of the UK’s biggest clothing retailers and was likely to have benefited from the closure of non-essential stores in large areas of the UK for much of the period.
The update covered the 15 weeks to January 2 (its third quarter) and the retailer said like-for-like sales excluding fuel were up 8.6%, total sales excluding fuel were up 6.8% and for the shorter Christmas period, like-for-like sales rose as much as 9.3%.
And clothing? Well, the Q3 rise here was more muted with a 0.4% increase. But given that supermarkets had reported sluggish clothing sales for much of the year, it wasn’t bad. Sainsbury’s itself had reported lower clothing sales year-on-year in both Q1 and Q2.
Meanwhile, its general merchandise sales also rose 6% in Q3, with the Argos operation up 8.4%.
Both clothing and general merchandise sales were actually better than it had expected and their gross margins additionally benefited from better-than-anticipated full-price sales too. This was driven by “customers shopping earlier for Christmas and successful changes to [its] Black Friday trading strategy”. Sainsbury’s also said that Tu Clothing grew its market share in both value and volume, with strong online growth.
That online growth is no surprise as the retailer’s total digital sales leapt by 81% and online revenue made up 44% of its Q3 total.
The company now expects underlying profit before tax of at least £330 million in the financial year to March 2021. That’s down from £586 million in the previous year, but has to take into account the extra costs the business has faced, and the fact that it’s paying back £410 million in Covid-linked business rates relief.
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