Shoppers’ late festive dash gives Sainsbury’s lift as staff get 5% pay rise | J Sainsbury

A last-minute dash to secure Christmas shopping lifted sales at Sainsbury’s over the festive period, as the supermarket chain gave its staff a 5% pay rise.

The group said its customers were “shopping late and [buying] record volumes in the days ahead of Christmas”, helping to boost grocery sales by 3.8% in the six weeks to 4 January while sales at its Argos chain rose 1.1% in that period.

The performance on groceries was similar to its rival Tesco, which on Thursday reported a 4% rise in underlying sales over the key festive period – with the UK’s two largest grocers thought to have benefited from difficulties at the smaller rivals Asda and Morrisons.

However, Sainsbury’s said sales at Argos, which sells non-food items from ironing boards to gaming consoles and sofas, were down 1.4% over the final three months of the year.

The company said a rise in customer numbers and sales growth over Black Friday and Christmas weeks was more than offset by “subdued customer spending outside these key periods and a highly promotional environment”.

Sales of toys and large electronics, such as TVs, were hit particularly hard as shoppers reined in spending on non-essentials.

Sainsbury’s said it was splitting the 5% pay rise for 118,000 employees into two parts – increasing to a minimum of £12.45 an hour from March and then £12.60 in August in order to “navigate a challenging cost environment”.

The pay rise comes after Greggs announced it had put up pay by just over 6% for its workers this month – and had increased prices on key lines including its sausage roll by an average 4% to help pay for the additional costs.

Sainsbury’s said it had gained market share over Christmas and that “more and more customers are choosing us for their big weekly shop”, with sales of fruit, vegetables, meat, fish and poultry all doing particularly well.

Customers were prepared to celebrate, spending 16% more on the retailer’s premium Taste the Difference range, while clothing sales rose 2.2% – in a declining market.

The retailer said it would meet annual profit expectations of just over £1bn for its retail business and upped expectations for its financial services division, leading to the analyst Clive Black at Sainsbury’s broker Shore Capital to up forecasts by £10m.

However, analysts at Jefferies said they did not expect a wider upgrade as Sainsbury’s had displayed “a familiar pattern: strong grocery performance offset by a weaker-than-expected Argos”.