Supermarket giants enjoy festive cheer

Published on Thursday 10 January 2008 09:22

TWO of the UK's biggest supermarkets today gave the beleaguered retail sector a shot in the arm with news of strong festive trade.

Sainsbury said like-for-like sales over its third quarter, which includes Christmas, rose by a slightly better-than-expected 3.7 per cent, once fuel sales had been stripped out.

Analysts had been expecting Britain's third-largest supermarket company to turn in a rise of around 3.6 per cent over the three months to December 29.

And Asda, the country's number two player in the sector, said it had enjoyed its "best ever Christmas" – although it did not give figures.

But Sainsbury – which saw more than 21.5 million customers visit its stores in the week before Christmas – followed a lead set by other retailers in warning of tougher times ahead, with consumers expected to tighten their belts in the year ahead as household budgets come under increasing pressure against a background of price hikes, such as rising energy and mortgage bills.

"This is a good result for the Christmas quarter, and is particularly pleasing given the level of competition during this period," Sainsbury chief executive Justin King said.

"We served more than 300,000 customers per hour on December 23, the busiest trading day of the week," he added.

Online sales saw growth of more than 40 per cent over the quarter, with the group delivering 90,000 orders in the week before Christmas – a 50 per cent rise on last year. The company, which commands a 16.4 per cent slice of Britain's supermarket sector, also said that it had passed its three-year Making Sainsbury's Great Again recovery plan target – set in March 2005 – for boosting sales by 2.5 billion three months ahead of target.

Mr King added: "The improvements we have made to our business during our recovery means we are well equipped to perform in this challenging environment and we remain confident in our ability to deliver our growth plans."

Sainsbury's performance is in contrast to yesterday's third-quarter sales from Marks & Spencer, which were down 2.2 per cent.

Meanwhile, Asda, which is owned by the giant US chain Wal-Mart and has 16.7 per cent of the UK grocery market, said it had enjoyed its best Christmas ever. However, it declined to issue actual trading figures.

"We served a million more customers in the week before Christmas compared with the previous year," chief executive Andy Bond said.

"As a result, we had our best ever Christmas, with the strongest performances in both fresh food and clothing."

Asda also said trading had got off to a good start this year. "I believe value retailers, who deliver low prices and great quality week in, week out, will be the winners in 2008," Mr Bond said.

Stephen Pope, chief global market strategist at Cantor Fitzgerald Europe, said: "The food retailers, out of all the retailers, are going to be fine. They have a degree of immunisation because we all have to eat."