Sainsbury's reports record Christmas sales of more than £1bn

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Sainsbury's has reported record Christmas sales of more than £1bn across the group.

The supermarket giant said like-for-like sales rose 0.1% in the 15 weeks to 7 January.

This beat analyst expectations of a 0.8% fall in sales. Shares in the chain jumped more than 6% in morning trading.

But chief executive Mike Coupe said the "market remains very competitive and the impact of the devaluation of sterling remains uncertain".

The pound has been falling against the dollar and the euro since the EU referendum and there have been warnings that this will lead to higher prices this year as import costs rise.

Meanwhile discount rival Lidl reported a 10% increase in sales over the Christmas period.

As with Aldi it does not give like-for-like sales, which strip out the effect of new store openings and are therefore a better comparison. The company said it was "incredibly encouraging" that it achieved "its most successful festive trading period ever" in such a competitive market.

'Pulled up by the bootstraps'

Argos, which Sainsbury's bought last year, had strong sales over Christmas and Black Friday.

It reported a rise in third quarter like-for-like sales of 4%. Sainsbury's has been rolling out Argos outlets in its supermarkets.

Mr Coupe said Argos concessions had been "performing well as awareness of the convenience of shopping at both Sainsbury's and Argos under one roof grows among our customers".

Sales growth in the concessions climbed nearly 40% in the run-up to Christmas, Mr Coupe said on a conference call.

Laith Khalaf, a senior analyst at Hargreaves Lansdown, said Argos had "pulled Sainsbury's up by its bootstraps over the Christmas trading period".

"However, against a backdrop of food deflation, flat sales are a pyrrhic victory for the supermarket, and represent an improvement on performance so far this financial year."

He added that the weak pound "is likely to put pressure on margins, and profits".

'Promising signs'

The supermarket said clothing and general merchandise businesses had a strong quarter, up 10% and 3% respectively.

Online and convenience store performance was also strong, with sales up more than 9% and 6%. Online sales made up 18% of total group sales in the quarter.

Third quarter like-for-like food sales at the retailer were slightly down, Mr Coupe said.

However, he said sales of Sainsbury's Taste the Difference own-brand range had jumped by 50% over the period.

In general, retailers had buoyant food sales for retailers over Christmas period, a report by the British Retail Consortium suggested on Tuesday.

Richard Hunter, head of research at Wilson King Investment Management, said: "The larger supermarkets may not entirely be out of the woods just yet, but the signs are as promising as they have been for some considerable time."

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