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Argos helps boost Sainsbury's group sales by 12.7%

Published: 3 May 2017 - Jenny Wonnacott

Sainsbury's has announced preliminary results for the 52 weeks to March 11, 2017, with group sales at £29,112m, up 12.7% “mainly as a result of the Argos contribution.”

There are now 59 Argos stores within Sainsbury
There are now 59 Argos stores within Sainsbury's supermarkets, and these are having a very positive effect on the supermarket's sales

Underlying profit before tax was down 1%, but total transactions increased by nearly 3% to 26 million per week. Sainsbury's and Argos' general merchandising and clothing “outperformed the market”, and the retailer is forecasting the delivery of its £160m EBITDA synergy target from the Argos acquisition six months early, which will accelerate the plan to open 250 Argos Digital stores in Sainsbury's.

Argos grew sales by 4.1% during the year, and there are currently 59 Argos stores within Sainsbury's supermarkets, with 207 digital collection points. The supermarket is continuing to benefit from Argos Digital stores, with corresponding Sainsbury's seeing a 1 – 2% uptake in sales.

Like-for-like sales at Argos stores in Sainsbury's supermarkets that have been open for more than one year are up between 20 and 30%.

Around 60 Argos high street stores are expected to be transformed to the new digital format during the next financial year, with over one third of the Argos store estate becoming digital by this time next year.

Sainsbury's group chief executive Mike Coupe said: “This has been a pivotal year and we have made significant progress delivering and accelerating our strategy. Sainsbury’s Group offers customers market-leading product choice, value and convenience, whenever and wherever they shop with us.

“Food is the core of our business and we are committed to helping customers live well for less. Our food business remains resilient in a challenging market and we continue to innovate in quality and to invest in price. We are also investing in growth areas of the business to meet the changing ways that customers shop. Sainsbury’s design-led General Merchandise and Clothing both outperformed the market and we saw strong growth in Sainsbury’s Groceries Online and Convenience channels. 2

“We are pleased with the progress made since we acquired Argos. We have opened 59 Argos Digital stores in Sainsbury’s supermarkets and they are performing well. We are therefore accelerating our plan to open a total of 250 Argos Digital stores in Sainsbury’s supermarkets and will deliver our £160 million EBITDA synergy target by March 2019, six months ahead of schedule.

“Sainsbury’s Bank has achieved an important milestone with the migration of savings customers and ATMs onto our new banking platform. We are confident in the growth opportunities at Sainsbury’s Bank and are well set to deliver strong profit growth.

“We continue to find ways to simplify our business and reduce costs. We are on track to deliver our three-year £500 million cost saving programme by the end of 2017/18 and we will deliver a further £500 million of cost savings over three years from 2018/19. We benefit from a strong balance sheet and have reduced our net debt by £349 million to £1,477 million.

“The quality and range of our products, combined with our market-leading service, availability and channels set us apart from our competitors. Our values support our growth and our vision to be the most trusted retailer where people love to work and shop. I would like to thank our 195,000 colleagues across the Group for the difference they make to our customers every day.”

Source: Sainsbury's Plc

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