By James Davey
LONDON (Reuters) – British supermarket group Sainsbury’s on Thursday raised its full-year profit forecast as it reported strong trading in the Christmas quarter, benefiting from COVID-19 restrictions that kept people eating and drinking at home.
Sainsbury’s, Britain’s largest grocer after Tesco (LON:), said like-for-like sales, excluding fuel, rose 8.6% over the 15 weeks to Jan. 2, its fiscal third quarter.
After forgoing business rates relief of 410 million pounds ($557 million), it expects to report underlying profit before tax of at least 330 million pounds in its year to March 2021.
That is above a forecast made last month of at least 270 million pounds, though down from the 586 million it made in the previous year.
Sainsbury’s shares were up 4% in early trading.
The group said grocery, general merchandise and clothing sales were stronger than it had expected, particularly during England’s second national lockdown in November and subsequent increased restrictions throughout the United Kingdom.
Grocery sales grew 7.4%, with groceries sold online up 128%, it said.
Government restrictions forced many customers to change their Christmas plans at the last minute, which led to different shopping behaviour.
“We sold smaller turkeys and more lamb and beef than normal. While people had smaller gatherings, they still treated themselves,” CEO Simon Roberts said.
Sainsbury’s premium Taste the Difference brand saw an 11% increase in sales and premium champagne sales climbed 52%.
General merchandise sales grew 6.0%, sales in the Argos division rose 8.4% and clothing by 0.4%.
Overall digital sales grew 81%, representing 44% of total sales.
Industry data from market researcher Kantar, published on Tuesday, showed all of Britain’s supermarket groups benefited from unprecedented Christmas demand as UK shoppers spent 11.7 billion pounds on groceries in December.
Restrictions to contain the novel coronavirus mean many people are working from home and the hospitality sector is closed.
Adding to the demand for supermarket goods, many of the five million or so Britons who normally travel abroad for Christmas stayed at home.
Morrisons and Aldi, Britain’s fourth and fifth largest supermarket groups, reported strong Christmas trading earlier this week.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.