Sainsbury non-food sales tumble as squeezed customers buy essentials only

SAINSBURY posted more strong food sales today but the general merchandise arm and the Argos electrical store are doing far less well – a sign of the squeeze on non-essential spending.

The company is the UK’s second biggest supermarket with market shares of 16%, far behind Tesco at 32%.

It has done well lately due to the struggles at Morrisons and Asda, seen to have wavered under private equity ownership.

Today it reported sales up 4.2% in the quarter to June 22. But Argos sales tumbled 6.2% and General Merchandise sales, which include clothes, are down 4.3%.

Sainsbury partly blamed the poor weather, although it did sell more TVs than usual ahead of Euro 2024.

It should be able to hit City targets of operating profit of between £1.01 billion and £1.06 billion for the year. But some of the sales numbers unnerved investors and the stock fell 12p to 245p.

Sainsbury has been stealing custom from rivals, Lidl and Aldi particularly.

CEO Simon Roberts said: “We are pleased with our market-beating grocery performance and the early progress we’re making against our Next Level Sainsbury’s plan. We’ve been winning from competitors every month for 15 months, as more and more people are choosing Sainsbury’s for their big weekly shop.”

Sophie Lund-Yates, the lead equity analyst at Hargreaves Lansdown, said: “As inflation cools, the weather worsens and tough comparisons crop up on the course, eking out the amount of growth seen last year was always a difficult ask. But there is a lingering Sainsbury’s specific issue in its ownership of Argos. Electronics aren’t faring well in this economic climate, as people prioritise the essentials.”