British supermarket group Sainsbury’s raised its profit outlook after beating its own expectations for trading in the Christmas quarter as Covid-19 restrictions meant people celebrated more at home.
Sainsbury’s, Britain’s largest grocer after Tesco, said on Thursday like-for-like sales, excluding fuel, rose 8.6% over the 15 weeks to January 2, its fiscal third quarter.
Food, general merchandise and clothing sales were all stronger than it had expected, the group said, driven by England’s second national lockdown in November, subsequent increased restrictions throughout the UK and improved online operations.
Sainsbury’s shares were up 3.7% at 10.21am GMT, taking year-on-year gains to 10%.
The restrictions made many customers change their Christmas plans at the last minute, which led to different shopping behaviour.
“Given all of the challenges that everyone’s felt, customers wanted to treat themselves,” CEO Simon Roberts told reporters.
Smaller gatherings meant Sainsbury’s sold smaller turkeys and more lamb and beef than normal, Roberts said.
While grocery sales grew 7.4%, the chain’s premium “Taste the Difference” brand experienced an 11% rise and sales of premium champagne soared 52%.
General merchandise sales grew 6%, sales in the Argos division rose 8.4% and clothing by 0.4%.
Online grocery sales jumped 128% and overall digital sales grew 81%, representing 44% of total sales.
After forgoing business rates relief of £410m, Sainsbury’s forecast underlying pretax profit of at least £330m for its 2020/2021 year.
That is above a forecast made in December of at least £270m, though down from the £586m made in 2019/2020, due to the costs of the pandemic.
As the spread of the coronavirus intensifies, Roberts said rising staff absence rates had reached 8%.
Restrictions to contain the virus mean many people are working from home and the hospitality sector is closed.
Adding to the demand for supermarket goods, many of the 5-million or so Britons who normally travel abroad for Christmas stayed at home.
Industry data published on Tuesday showed all of Britain’s supermarket groups benefited from unprecedented Christmas demand as the country’s shoppers spent £11.7bn on groceries in December.
Morrisons and Aldi, Britain’s fourth- and fifth-largest supermarket groups, reported strong Christmas trading earlier this week, as did B&M on Thursday.