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Sainsbury’s posts better-than-expected Christmas figures
But it gave no further details on its takeover plans for £1 billion-rated Argos owner Home Retail Group after the firm took the market by surprise last week when it revealed it had made an approach the group in November, which was rejected.
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The rapid growth of German-owned discounters Aldi and Lidl has been challenging for incumbent supermarkets like Asda, Sainsbury’s and Tesco – which is Britain’s biggest retailer.
The fall in sales could be credited to the company’s decision to reduce levels of promotional activity over the period, combined with the fact it also reduced the number of multi-buys in favour of lower regular prices.
Coupe said that decline was an improvement on the previous two quarters and he now expects the second half of the financial year to be better than the first half.
The note highlighted obvious brand crossover citing that over 40% of United Kingdom households have shopped in both Sainsbury’s and Argos.
Like-for-like sales in the second half of the year are expected to be better than the first, thanks to the strong Christmas. It has until February 2 to decide whether to make a formal offer under United Kingdom takeover rules.
Chief executive Mike Coupe said: “We have traded well during the festive period in a highly competitive market”.
But like-for-like retail sales for the third quarter were down 0.4% excluding fuel and also fell 1.8% including fuel.
Grocery online sales rose almost a tenth and it had a record week in the quarter, delivering over 289,000 online orders.
Its trading failed to match the 0.2% sales increase reported on Tuesday by smaller rival Morrisons in what marked an unexpected result from the embattled group, although this was for the nine weeks to January 3.
It (Other OTC: ITGL – news) is widely expected that Homebase will be sold-off to private equity or another retailer as a side-deal to Sainsbury’s takeover, as it was not mentioned once by the supermarket in the presentation. Media reports say it offered about 1.1 billion pounds ($1.59 billion) but some Home Retail investors want 1.6 billion pounds or 200 pence a share.
Sainsbury’s is reported to be still “considering its position” and has set out its rationale for the proposed tie-up on its website.
The supermarket also had great success with its Christmas ad campaign, featuring Mog, a CGI cat who gets itself into all sorts of trouble.
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The group said it had benefited from shoppers trading up to more premium products, such as its “Taste the Difference” range, over the festive period.