Fashion gives Q2 boost to Sainsbury's after slower start to first half
The latest results announcement for UK supermarkets and general merchandise giant Sainsbury’s didn’t make brilliant reading, but at least “clothing and GM performance improved quarter-on-quarter as comparatives normalised,” the company said.
Despite being thought of mainly as a food retailer, the business is actually one of the UK’s biggest clothing sellers via its Tu Clothing brand and other labels sold both in the supermarkets and its Argos chain.
Looking at the headline figures for the 28 weeks to September 21, group sales of £16.856 billion were down 0.2% while retail sales (excluding fuel) dropped 0.6% and like-for-like sales fell 1%. Underlying profit fell by £41 million to £238 million “due to the combined impact of the phasing of cost savings, higher marketing costs and tough weather comparatives”.
So what did that quarter-on-quarter improvement for clothing really mean in percentage terms. Well, the company’s clothing sales actually fell 1.2% in the first half, but that divided down into a 4.5% fall in Q1 but a much more pleasing 3.5% rise in Q2.
Meanwhile, GM — which mainly means the Argos operation it bought a few years ago — fell 2.5% in the half, with a 3.1% Q1 drop and a 2% fall in Q2. The company said that its Argos sales grew ahead of the market.
The retailer is still working on transforming itself from a supermarket chain into a more diversified operator and said it’s focused on bringing Sainsbury’s and Argos closer together “to give customers easier access to all our products and services”.
It’s investing in its store estate and improved 172 supermarkets during the half, work that usually boosts the ability of customers to collect online clothing and GM orders in-store. Its Argos Fast Track delivery and collection continued to grow during the period, it said.
It also said it has converted 176 Argos stores to its digital format in this half and will convert the majority of the remaining stores by the end of the year.
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