Tu, the clothing division at UK supermarket group Sainsbury’s, “significantly” outperformed the market in the first half as group sales climbed by almost 7%, the retailer said in a trading update today (9 November).
Clothing sales grew by 6.8% for the 28 weeks to 23 September, increasing Sainsbury’s market share, while online apparel sales were up by 54%, reflecting improvements to the website and to the company’s Click & Collect proposition.
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Meanwhile, menswear now accounts for around 15% of all clothing sales and is the fastest growing category in Tu clothing by volume. Capitalising on this success, Sainsbury’s launched the first supermarket premium menswear ranges in October – Tu Premium and Tu Formal – in a move it said strengthened its clothing brand and consolidated its position as a “leading clothing retailer and a destination shop for great value, stylish clothing”.
The group has also invested in branded menswear ranges such as Russell Athletics and Admiral, and negotiated an exclusive partnership with America’s National Football League to sell officially licensed sportswear ahead of the start of the NFL season in September.
General merchandise sales slipped 0.1% in the first half, while total retail sales were up 1.9%, excluding fuel, and like-for-like sales up 1.6%, also excluding fuel.
“We have delivered a good performance across the group in the last six months, with more customers choosing to shop at Sainsbury’s in the first half than ever before. We are now three years into delivering our differentiated strategy and are seeing clear results,” said CEO Mike Coupe.
He adds Sainsbury’s is to roll out Click & Collect for Argos and Tu clothing to 100 Sainsbury’s Locals, and Argos Fast Track same-day delivery and collection is now the group’s fastest-growing channels.
“General merchandise and clothing both outperformed the market and grew market share. We have exceeded our cost savings target as a group, saving GBP100m this half, which gives us the flexibility to increase pay for our store colleagues and improve our customer offer while delivering returns to shareholders,” he adds.
Molly Johnson-Jones, senior retail analyst at GlobalData, notes clothing sales remained strong during the first half but general merchandise continued to struggle in a “tough consumer environment”.
She adds: “Whilst results are positive, given the effects on inflation we would have been disappointed with anything less. The grocer’s momentum from the first quarte hasn’t been maintained, but with Christmas coming up, its focus on innovative products and EDLP, we would hope that it can maintain like-for-like growth into the third quarter.
“Of all of the grocers, Sainsbury’s improvement seems the most muted, and a focus on profitability must be maintained in order to prevent further investor discontent after the share price fell 6.9% in the two weeks leading up to results.”
