Sainsbury's FY clothing sales slide as pandemic bites - Just Style
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Sainsbury’s FY clothing sales slide as pandemic bites

28 Apr 2021

UK supermarket group Sainsbury’s saw its clothing sales fall 8.5% in the last financial year as the pandemic had a significant impact on group revenues.

For the 52 weeks to 6 March 2021, clothing sales dropped to GBP0.9bn (US$1.25bn), reflecting an 18.3% decline in the first half but a 1.5% recovery in the second.

Online sales were particularly strong, growing by 64.6% for the full year, helping to partially offset an in-store decline of 16%. Full-price sales were up 15% as customers stocked up on pyjamas, loungewear and childrenswear. Despite this, the division has continued to gain clothing market share, Sainsbury’s reported.

Group sales, meanwhile, were down 0.3% year-on-year to GBP32.28bn, while retail sales increased 7.3% to GBP28.84bn, driven by strong grocery and general merchandise demand through the pandemic. Digital sales, meanwhile, soared 102% to GBP12.1bn.

The retailer made a net loss of GBP280m in the period from earnings of GBP152m a year earlier.

“This year’s financial results have been heavily influenced by the pandemic,” said chief executive Simon Roberts. “Our full-year direct Covid costs were GBP485m leading to a 39% decrease in full-year underlying profit.

“We have accelerated our digital transformation this year as we focus on serving customers, however they want to shop with us. While there is much that we cannot predict in the year ahead, we are absolutely focused on delivering for our customers and our shareholders.”

Sainsbury’s continues to expect underlying profit before tax in the financial year to March 2022 to exceed March 2020 level of GBP586m. The retailer said it is “comfortable” with consensus estimates of around GBP620m.

Shore Capital analyst, Clive Black, says: “Whilst open throughout the pandemic, the supermarkets did not find a way to breakthrough in clothing in FY2021 as shoppers hunkered down to loungewear and essentials; Sainsbury’s clothing sales fell by 8.5% in FY2021, albeit rising 4.2% in Q4.

“Accordingly, even with the reopening of non-essential retail, we can foresee Sainsbury’s ‘Tu’ brand benefiting from a rising tide of activity as people move about more and so buy more work and occasion wear.”