Sainsbury's reveals premium champagne sales rose by 52% and Taste the Difference range by 11% as it took 1.1MILLION online orders over Christmas - as supermarket's share price hits two-year high

Sainsbury's has enjoyed such strong Christmas sales that its annual profits will be £60million more than expected – with its share price hitting a two-year high.

Britain's second largest supermarket chain, which also owns Argos, said its underlying pre-tax profits for the year are now expected to hit £330million.

That figure was significantly up on the £270million previously predicted, as the pandemic continued to boost food stores while Britons are told to stay at home.

Sainsbury's added that premium champagne sales were up 52 per cent, Taste The Difference sales rose by 11 per cent and mincemeat sales increased by 24 per cent.

Argos sales rose 8 per cent, overall Christmas sales were up 9 per cent - and digital sales rose by per cent, meaning they now account for 44 per cent of total sales.

Investors were buoyed by the Sainsbury's figures, with the share price up 5 per cent or 12 points to 244 this afternoon – its highest level since February 19, 2019.  

Sainsbury's has enjoyed a strong Christmas performance with overall sales up 9 per cent

A shopper leaves a Sainsbury's supermarket in Tunbridge Wells, Kent, this afternoon

TWO-YEAR SHARE PRICE: The Sainsbury's share price was up 5 per cent or 12 points to 244 this afternoon – its highest level since February 19, 2019

Sainsbury's said today that the second English national lockdown in November and subsequent tiering in December helped sales soar.

The unplanned profit upgrade was revealed as supermarket bosses said sales in the three months to January 2 were up 8.6% per cent on a like-for-like basis.

Over the Christmas period itself - measured by Sainsbury's as the nine weeks to the same date - these were even higher, growing 9.3 per cent.

The like-for-like measure does not include the permanent closure of 120 standalone Argos stores which were not reopened after the first national lockdown in March. On a total basis, sales during the three-month period were up 6.8 per cent.

Sainsbury's said there was strong growth in both its grocery stores and at Argos, which remained open for click-and-collect orders, alongside huge surges in online deliveries. 

People push their trolleys through at a Sainsbury's store in London last month on December 22

Around 1.1 million online food orders were delivered in the ten days leading up to Christmas. A delivery driver is pictured with a face mask in London on December 23

Meanwhile non-food sales were up 6 per cent as non-essential retailers were forced to either close stores or only offer click-and-collect services.

Analysis: J Sainsbury unwraps a strong set of Christmas numbers

By SUSANNAH STREETER  

J Sainsbury has unwrapped a strong set of Christmas numbers as shoppers curled up at home to celebrate the season with supermarket treats. With like for like sales up by 8.6 per cent over the quarter (excluding fuel), the retailer now says it is likely to report underlying profit before tax of at least £330million in the financial year to March 2021, after letting go business rate relief of £410million,

The supermarkets have been riding the wave of online shopping during the pandemic and J Sainsbury is no exception seeing online orders rise by 128 per cent in the rush to book up delivery slots. The retailer delivered 1.1 million orders in the ten days before Christmas, double last year's rate.

Turkeys were smaller as gatherings were forced to downsize, but customers splashed their cash on premium champagne with sales up by more than 50 per cent. Party food was popular and home baking once again saw a renaissance as people rediscovered lockdown habits, with mincemeat sales up by a quarter.

What's impressive is that J Sainsbury has been collecting many more clicks for not just food orders but general merchandise as well with sales growth of 6 per cent. The ease of pick-up of gifts from Argos counters inside the supermarkets is likely to have helped boost Argos sales by 8.4 per cent. Given the success of Argos, compared to in-store ranges which saw a fall of 5.4 per cent, we could potentially see a scaling back of J Sainsbury branded merchandise in the future.

The supermarket sector has had to adapt quickly to the rapid change in consumer habits brought on by the pandemic. J Sainsbury is still on a conveyor belt of change but it's certainly going in the right direction.

Ongoing price cuts to stay competitive against its rivals are continuing, and that is likely to put pressure on margins if the bun fight for the value end of the market continues.

Susannah Streeter is a senior investment and markets analyst at Hargreaves Lansdown

Online grocery sales jumped 128 per cent over the period. Around 1.1 million online food orders were delivered in the ten days leading up to Christmas, the grocer added.

As a result, underlying pre-tax profits for the year are expected to hit £330million, compared with previous guidance of £270million - although this will be down on the £586million recorded last year due to Sainsbury's agreeing to pay its £410million business rates bill.

Chief executive Simon Roberts said the tighter Christmas restrictions saw customers turn to smaller turkeys and an increase in lamb and beef sales, but shoppers treated themselves to more premium products.

He said: 'While people had smaller gatherings, they still treated themselves, with Taste The Difference sales up 11 per cent.

'Premium champagne sales were up 52 per cent, Taste The Difference party food was popular throughout December, and people did more home baking than usual, with mincemeat sales up 24 per cent.

'Customers still wanted New Year's Eve at home to feel special and we sold a record number of steaks.'

Mr Roberts added: 'Argos sales were up over 8 per cent, with fast-track home delivery and click and Collect beating expectations for Black Friday and Christmas.'

The supermarket declined to reveal how its 800 convenience stores have performed, but confirmed overall sales in those sites had fallen.

Central London stores have seen the worst performance, but there has been an increase in sales and bigger basket sizes in sites in residential areas. 

The company did not reveal how badly overall sales fell.

Since the introduction of a third national lockdown in England, the boss also revealed absence levels are lower than they were in March but are starting to rise.

He said: 'We're very much making sure we're putting all the policies in place to support colleagues who need to shield at home.'

He added: 'At the moment we're averaging around 8 per cent. That's where we are today. We've seen a step up in the last few days.'

Bosses also called on the Government to use Covid-19 to hold a major review of business rates, but fell short on demanding the Treasury extend a business rates holiday beyond April to support struggling high streets.

Mr Roberts said: 'We've long held the view that business rates need to change. The Government have committed to do a review, and we fully encourage and support it. Covid has to be the catalyst for a change in the way business rates have been working. A business rates review is absolutely critical and very important.'