Sainsbury’s has become the latest retailer to post strong Christmas sales figures, saying it achieved a “record” festive season.
The UK’s second largest supermarket group, which also includes Argos, said it now expected annual profits for the year to March towards the upper end of its previously guided range between £630m and £690m.
Underlying pre-tax profits, for its 2021-22 financial year, came in at £730m.
The downwards shift reflects investment across the grocery sector in staff pay and price as budgets are squeezed by the energy-led cost of living crisis.
Total sales, excluding fuel, grew by 5.2% over the 16 weeks to 7 January compared with the same period last year.
That was driven by inflation, the chain said, with “relatively resilient volume trends”.
Sainsbury’s said early Christmas shopping helped sales jump over the latest quarter as shoppers looked to spread the cost of the festive season.
Chief executive Simon Roberts said: “We delivered the best possible Christmas for customers as millions of households managed their budgets differently, hosting larger gatherings again and treating themselves at home.
“Customers shopped early, buying Christmas treats and fizz more than once and looked for deals, taking advantage of Black Friday and other seasonal offers.
“Argos offered great value and quality, and, as train and postal strikes disrupted the country, customers appreciated its reliability and convenience.
“Sales were also boosted by the World Cup as people celebrated more at home.”
Resilience in the face of the cost of living crisis has been a theme of the post-Christmas retail reporting season so far.
Market leader Tesco releases its update on Thursday.
But Sainsbury’s shares fell at the open.
Neil Wilson, chief markets analyst at markets.com wrote: “With food inflation running at 13% at the moment I am not seeing a heck of a lot to cheer here…fag packet arithmetic suggests there is not a lot of volume growth (contraction?) here, but we need to see more detail.
“Perhaps that is why shares are off 3% or so this morning. Profits are expected to be at the upper end of the guidance range of £630m to £690m, but remains cautious on the consumer outlook.
“Not a single mention of the word ‘margin’ in the release is suspect”.
Among other major retail names updating the market on Wednesday was JD Sports Fashion.
It reported total revenue growth of over 20% in the six-week Christmas shopping period to the end of December.
The company raised its full year profit forecast as a result, saying that it now expected profit before tax and exceptional items to come in above £1bn.