In its recent interim results, J Sainsbury’s showcased strong performance in its core supermarket business, with increased sales and market share gains. Simultaneously, the company reported a deliberate dip in clothing sales to avoid aggressive markdowns in a highly competitive market.
For the 28-week period ending on September 16, the company reported a notable 3.5% surge in total group revenue, reaching £16.98 billion (excluding VAT but including fuel). Despite this revenue growth, the pre-tax profit decreased by 27% to £275 million, while after-tax profit saw a significant 46% decline, settling at £155 million.
Overall group sales, including VAT, witnessed a 2.9% increase, totaling £18.6 billion, with the underlying pre-tax profit maintaining stability at £340 million.
Sainsbury’s achieved an impressive 8.4% increase in like-for-like sales (excluding fuel) in the first half. In contrast, the clothing segment experienced a deliberate decline, with a total sales decrease of 8.4%, comprising a 3.7% drop in the first quarter and a more substantial 14.6% decline in the second quarter.
Conversely, general merchandise sales exhibited resilience with a 2.5% rise over the six months. This growth was divided into a 4.9% increase in the first quarter and a marginal 0.6% decrease in the second quarter. General merchandise at the Argos chain saw a positive uptick of 3.3%, whereas Sainsbury’s supermarkets faced a modest 1.9% decrease.
Delving deeper into the fashion performance, Sainsbury’s disclosed that its Tu clothing line implemented a disciplined trading approach. This approach led to reduced sales, but it effectively preserved stable full-price sales participation, safeguarding profitability in a market characterized by seasonality and promotions.
Furthermore, the Tu.co.uk platform now proudly hosts 37 third-party brands, and Sainsbury’s has introduced nine branded fashion destination hubs within its supermarkets. These strategic moves are aimed at enhancing the overall shopping experience and increasing the average customer spend.
By embracing this balanced strategy, Sainsbury’s positions itself for sustainable growth and the ability to adapt to evolving market dynamics.
