Sainsbury's Tu fashion "performs well" in H1 despite a 6% sales dip
With food prices high on the agenda for consumers and supermarkets in these tough times, you have to dig deep into Sainsbury’s first-half results to find out how the retailer is doing on the fashion front.
And it’s performing well, under the circumstances. It said its core Tu fashion brand “is holding up well despite pressure on customers' disposable incomes”.
In fact, Tu's “great value fashion continues to win customers”, and the brand “remains strong and structurally more profitable than pre-pandemic, with significantly lower promotional participation”, it said Thursday.
But overall, clothing sales in the 28 weeks ended 17 September were down 6% on the year. Although they were 2.5% higher than pre-pandemic and full-price sales grew from 64% to 80% of the mix.
There was also a “record performance” in womenswear dress sales, up 40%, and a good performance in Back-to-School clothing sales. And its latest ‘Tu & Me’ campaign autumn collection “was well received by customers”.
Elsewhere, general merchandise sales fell 6.1% across H1 but were up 1.2% in Q2, “driven by improved availability, favourable summer weather and strong market share gains”.
Argos, which now operates 414 stores inside Sainsbury's supermarkets, delivered “market outperformance”, noting the business “is more resilient than competitors”, with sales growing 1.6% in Q2. By focusing on investing in our brands and developing core capabilities, we have improved availability and range”, it said.
However, as part of its £1.3 billion cost-saving programme, which has already seen it close many standalone Argos stores, it said it expected to close about 50 more this year as part of the previously announced plans. But around 25 Argos sites are also set to open within larger Sainsbury's stores.
In an overview, CEO Simon Roberts said consumers are "watching every penny and every pound", noting he got "how tough it is for millions of households" so the firm is trying to keep prices low.
And the retailer was certainty hit by the rising cost of living with half-year pre-tax profits falling 29% to £376 million. Although overall revenue rose 4.4% to £16.4 billion, retail sales slipped 1.3% to £14.6 billion with core grocery sales up 0.2%.
But Sainsbury's said it was now “well placed” for the Christmas trading period, and “ready to deal with further cost-of-living pressures into next year”.
It said trading momentum has remained strong in the first few weeks of the second half and we have continued to make volume market share gains. “This reflects continued investment in our customer offer, supported by the strength of our financial position and cost savings programme”.
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