Sainsbury’s Argos Gets Squeezed by U.K.’s Supply-Chain Woes
Sainsbury’s Sales Hold Up Even as Lockdown Trends Recede
(Bloomberg) -- J Sainsbury Plc’s Argos home-furnishings arm has been hit by the U.K.’s supply-chain woes, taking the shine off market-share gains in the company’s supermarkets.
Britain’s second-largest grocer said sales in stores and online remained solid in the first half despite people eating fewer meals at home post-lockdown as they return to pubs and restaurants. Sainsbury is gaining market share after lowering prices of meat, fish, poultry, fruit and vegetables, according to a statement Thursday.
However, sales at Argos fell as the U.K. struggles with a shortage of truck drivers. Shares in Sainsbury fell 3.25% in early trading in London.
Sainsbury held its profit forecast for the full year steady and expects to generate profit of 660 million pounds ($901 million), exceeding pre-Covid levels.
“We have grown market share through improving value for customers, tripling our rate of food innovation and delivering customer satisfaction ahead of our key competitors,” said Simon Roberts, chief executive officer, in a statement.
Sainsbury’s underlying interim pretax profit was 371 million pounds in the first half, up 23%. The grocer was up against a tough comparison with last year when people were stockpiling food and buying more to consume from home while working.
Comparable sales of grocery, clothing and general merchandise rose 0.3% in the first half. Although online sales have eased from the peak during lockdowns -- when many people were turning to the internet to avoid having to visit stores and risk Covid infection -- e-commerce demand still remains at about double pre-pandemic levels.
Roberts said supply-chain disruption remains a considerable challenge but Sainsbury’s scale and cost-cutting program “puts us in a good position as we head into Christmas.”
Last month Sainsbury ended talks on selling its banking services unit as it said the discussions wouldn’t reward shareholders enough. Instead it plans to focus on strengthening and simplifying the banking division.
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