Sainsbury’s scents clothing potential as sales dip
- Q2 underlying pre-tax profit down 6.3% to GBP375m
- Underlying group sales down 0.3% to GBP13.916bn
- Retail sales flat
Sainsbury's has pledged to grow its non-food business
Supermarket retailer Sainsbury’s has pledged to grow its non-food business, including clothing, after its second quarter profit and underlying sales both fell.
Retail sales in the quarter were flat, while like-for-like sales fell 2.1%, the UK-based business added.
But the company pledged to grow its non-food business with a strong focus on clothing – part of the results of a strategic review of company activities.
It added that about 25% of its store portfolio would have “under-utilised” space over the next five years, which would partly be used to expand the retailer’s non-food offer.
Non-food business was profitable, Sainsbury’s said, with “significant growth potential”.
The company now sells clothing and general merchandise in about 420 of its supermarkets, with both categories growing at over 5% per annum – growth which Sainsbury’s expects to continue thanks to its relative low market shares.
Sainsbury’s has roughly doubled the size of its clothing business to about GBP750m since 2008/9, making it the seventh largest clothing retailer by volume, and 11th by value.
The company recently launched its biggest ever Tu clothing range, increasing its market share and registering double-digit revenue growth as a result, and has consolidated its position as the UK’s fourth biggest schoolwear retailer by volume.
“Sainsbury’s wider push on non-food is a wise one,” said George Scott, senior consultant at retail analyst Conlumino.
“It is developing a strong presence in clothing and focusing on growth spots in homewares, which links well to its core grocery offer.
“It is also making a greater play on seasonal products, which is an area it can easily flex its merchandising space to.”
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