John Ibbotson / 16th March 2017
Sainsbury’s figures are contradictory to the more positive ones shown for the Christmas trading period. The retailers acquisition of Argos is proving itself a purchase worth having, but that’s the stand alone figure in what is over all poor figures for Sainsbury’s. Here are my thoughts:
“In the end, Argos is proving a guardian angel rather than an albatross for Sainsbury’s.
“While the acquisition of the catalogue brand initially swallowed time and resources, it is now paying dividends for Sainsbury’s.
“Argos’s strong performance provided the stand-out numbers in an otherwise challenging set of quarterly sales figures.
“Of key concern will be the 0.5% fall in like-for-like retail sales and the 4% slump in general merchandise sales, which more than cancels out any reassurance provided by the brisk performance of the Sainsbury’s clothing brand Tu.
“Despite enjoying a better than expected Christmas, Sainsbury’s continues to lose market share – and the brand’s much-vaunted turnaround plan has been slower to show results than those of its rivals.
“In its core grocery business it remains adrift as Tesco and Morrisons staunch their losses and fight back with aggressive price cuts and fundamental structural reforms.
“In this context, Argos could emerge as a ‘get out of jail’ card for Sainsbury’s. With strong sales growth, albeit at the expense of margin, Argos offers Sainsbury’s the chance to build a long-term and genuinely multi-channel strategy.
“Sainsbury’s is playing a slightly longer game than some of its competitors by positioning itself more for the internet age than its rivals and future-proofing itself in this way could pay dividends down the line.
“It is by no means out of the woods yet, but having a plan that’s different to its competitors – and sticking to it – can count for a lot in the current environment.”