Sep 25, 2019
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Fashion sales up at Sainsbury's but Argos slows

Sep 25, 2019

Sainsbury’s had good news around its clothing sales on Wednesday as they rose in the second quarter after having been less strong of late. But the company had less to shout about around its general merchandise Argos operation as that continued to struggle.

Tu Clothing

Overall, the supermarkets giant said it's second-quarter total retail sales rose a tiny 0.1%, excluding fuel, with its like-for-like sales actually falling 0.2%.

General merchandise declined by 2% like-for-like, but clothing sales rose a fairly healthy 3.3%. The company’s Tu clothing brand had been one of the brightest spots in its overall operations in recent years, but started to falter in Q2 last year and fashion sales fell in each of the subsequent quarters in 2018 and 2019, so this latest figure will be encouraging for Sainsbury’s management.

What drove the recovery? CEO Mike Coupe said that in the latest quarter, the sales were boosted by clearance activity, which is no surprise given the more sluggish sales in Q1 that would have left plenty of product available for markdown. But on a more positive note, it was also helped by strong growth online and Tu continued to increase its market share. It’s now one of the key labels in the UK affordable fashion segment.

As mentioned though, while Argos also increased its market share in key categories, its overall sales were impacted by reduced promotional activity and the timing of new product releases in gaming and toys. The 2% like-for-like general merchandise fall would have been a disappointment after a drop of 3.1% during Q1.

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