Sainsbury’s also reported on Wednesday that its sales at stores open over a year fell 0.4 percent, excluding fuel, in the 15 weeks to January 9, its fiscal third quarter, ahead of analysts’ average forecast of down 0.7 percent and a second quarter decline of 1.1 percent.
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Total retail sales for the third quarter were up 0.8 percent excluding fuel, and were down 0.7 percent including fuel.
The retailer claimed more than 30M customer transactions in the seven days before Christmas – a rise of 2.6% year-on-year.
However chief executive Mike Coupe said Sainsbury’s had traded well over the festive period in what was a “highly competitive market”.
Jasper Lawler at CMC Markets said: “If Sainsbury’s does want to pull it off, then it may have to pay nearly half again as much as its first offer”.
There is now nearly no growth in the British food market, thanks to deflation caused by an ongoing brutal price war sparked by the rampant expansion of budget supermarkets Lidl and Aldi. “This helped attract an additional 114,000 shoppers, with sales increasing by 0.8% on past year.” .
According to market share figures from research firm Kantar Worldpanel, Sainsbury’s was the best performing of the big four supermarkets – which includes Tesco, Sainsbury’s Asda and Morrisons – in the 12 weeks to 3 January.
The group said it was still “considering its position” after it took the market by surprise last week when it revealed it had made an approach the group in November, which was rebuffed.
However, Sainsbury’s has said that a takeover would result in an overall increase in the number of Argos locations by opening concessions within its larger supermarkets and introducing click and collect points throughout its convenience store estate.
Mr Coupe also said that around half of Argos’ 734 stores have leases expiring in the next five years and some would close if a deal materialised.
The supermarket hailed the “huge success” of its Mog’s Christmas Calamity advert, featuring popular children’s book character Mog the Cat, as the sales performance marked a significant improvement on the 1.1% sales drop in the previous three months.
Sainsbury’s would take the axe to Argos if it pursues a takeover of owner Home Retail Group, the supermarket has revealed after the chain posted a better-than-expected Christmas performance today.
John Ibbotson, director of the retail consultancy Retail Vision, added: “As unofficial grocer to the middle classes, Sainsbury’s has seen fewer customers desert it in favour of the German discounters than its big four rivals, but its leadership has shown itself to be anything but complacent”.
Under Takeover Panel rules, Sainsbury’s has until February 2 to table an improved offer.
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At the end of the quarter, Sainsbury’s had 600 supermarkets and 757 convenience stores.
