Supermarket group Sainsbury’s, owners of furniture brand Habitat and catalogue retailer Argos, has reported a growth in half year sales while Argos suffered a decline.
According to its Interim Results for the 28 weeks ended 14 September 2024, total group sales rose 2.3% to £17.2bn from £16.8bn year-on-year.
Sainsbury’s sales were up 4.6% to £14bn, however General Merchandise & Clothing revenues were down 1.5% to £0.9bn. Argos sales were also down by 5% to £2.3bn in the period. Total group retail sales increased 3.1% to £16.2bn.
Pre-tax profit for the group resulted at £76m, down 51% from £155m.
The group said that Argos’ contribution was lower year-on-year, reflecting “tougher than anticipated trading conditions in the first quarter, before sales strengthened in the second quarter”.
For Argos, profit margins were impacted by lower sales, leading to heavier promotional activity and discounting, particularly in seasonal categories. Stripping out the effect of the closure of Argos in the Republic of Ireland, Argos sales decreased by 4.2%.
Looking ahead, the group said it remains “confident of delivering strong profit growth in the full year, with continued leverage from Sainsbury’s grocery volume growth and a stronger Argos H2 performance”.
Combined with continued growth in Nectar profit contribution and delivery of cost savings, Sainsbury’s continues to expect to deliver Retail underlying operating profit of between £1,010 million and £1,060 million, growth of between 5% and 10%.
Simon Roberts, Chief Executive of J Sainsbury plc, said: “Our food business is going from strength to strength and we’re making the biggest market share gains in the industry, with continued strong volume growth. More and more customers are coming to us for their big food shop, recognising our winning combination of value, quality and service.
“Our grocery volume growth has delivered strong profit leverage at Sainsbury’s, partially offset by a tough first quarter at Argos. Argos trading has improved through the second quarter and in more recent weeks, so we continue to expect to deliver strong retail underlying operating profit growth and free cash flow generation for the full year.
“With strong momentum and increasing confidence in the strength of our grocery offer, we’re now investing to bring the best of Sainsbury’s to more people in more locations, including the recent acquisition of eleven Homebase and two Co-op stores.
“Our brilliant colleagues and suppliers are at the heart of everything we do and I want to thank them for all their hard work as we set ourselves up to deliver a fantastic Christmas for our customers. As we head into the festive season, there is real energy and excitement at Sainsbury’s and Argos and we’re expecting another strong performance. We remain very focused on delivering for our customers, communities and shareholders.”
