LONDON, Jan 9 (Reuters) - Sainsbury's, Britain's second-largest supermarket group, on Friday reported a 3.4% rise in underlying sales for the key Christmas quarter with strong grocery sales offset by
Sainsbury's Struggles with Non-Food Sales Amid Holiday Season
Sainsbury's Sales Overview
By James Davey
Impact of Non-Food Sales
LONDON, Jan 9 (Reuters) - Sainsbury's, Britain's second-largest supermarket group, reported on Friday a fall in general merchandise and clothing sales for the Christmas quarter, taking the shine off a strong food performance and sending its shares sharply lower.
Grocery Market Trends
The group, which trails only Tesco by grocery market share, said general merchandise and clothing sales within Sainsbury's fell 1.1% and sales were down 1% in the Argos business over the 16 weeks to January 3 year-on-year.
Customer Behavior During Holidays
Grocery sales rose 5.4%, while group like-for-like sales increased 3.4%.
Sainsbury's shares were down 5% by 1055 GMT, paring gains over the last year to 23%, on concern over continuing weak general merchandise market conditions and the lack of a profit upgrade.
CUSTOMERS PRIORITISE FESTIVE FOOD
About one quarter of the group's sales are non-food.
"The conditions aren't going to change this year - cautious customers in general merchandise," CEO Simon Roberts told reporters.
Sainsbury's said it still expected to deliver retail underlying operating profit of more than 1 billion pounds ($1.34 billion) for its year to March 2026, versus 1.04 billion pounds made in 2024/25.
Industry data published on Tuesday showed Sainsbury's ended 2025 with a UK grocery market share of 16.3%, up 30 basis points on the year.
Sainsbury's update, following one from Tesco on Thursday, confirmed that the two biggest supermarket groups are continuing to outperform the wider grocery market with their focus on value at a time of subdued consumer confidence, still high inflation and weakening employment.
Both have continued to benefit from the enduring trend of UK consumers eating more at home rather than dining out to save cash, and at Christmas, they both saw customers prioritise festive food over spending on non-food items.
Sainsbury's said fresh food lines in its premium 'Taste the Difference' range soared 15% in the Christmas quarter.
MAINTAINING A COMPETITIVE EDGE
In April, Sainsbury's set aside cash to maintain its competitive edge after a pledge of sustained price cuts from Asda, the number three player, which has been losing market share and is taking a hit to profit to re-set its business.
Sainsbury's said it is winning share thanks to a strategy of matching discounter Aldi's prices on hundreds of key items and providing better prices for members of its popular Nectar loyalty scheme, financed by an ongoing programme of cost cuts.
"Value is super important to customers, that is not going to change," said Roberts.
($1 = 0.7448 pounds)
(Reporting by James Davey; Editing by Sarah Young and Emelia Sithole-Matarise)
