Full-year clothing sales at Sainsbury’s slipped after the UK supermarket group reduced its promotional activity in the period – although the move helped lift full-price sales the company said today (1 May).
With more than 8m customers regularly buying its Tu clothing, Sainsbury’s is the sixth largest clothing retailer by volume in the UK. It hailed its clothing business as “performing well in a highly competitive market” during the year, as the apparel segment held share amid a decline in line with the market, whilst full price sales increased.
Clothing sales slipped 0.8% for the 52 weeks to 9 March to GBP953m (US$1.25bn) from GBP961m in the prior financial year. Sales in the segment were down 1.6% in the fourth quarter, compared to a 0.4% rise in the same period last year.
Meanwhile, general merchandise sales were flat at GBP6.56m for the year and up 1.6% in the fourth quarter. Total retail sales were up 0.4% for the year, excluding fuel, but slipped 0.2% in the final quarter, while like-for-like sales were down for both the 12-month period and fourth-quarter, excluding fuel, by 0.2% and 0.9% respectively.
During the year, Sainsbury’s said it continued to rebalance its ranges away from lower margin products such as electricals towards higher margin ranges such as clothing.
“Tu clothing outperformed the market and while sales declined, our decision to remove a key promotional event during the year helped increase full price clothing sales by 12%,” Sainsbury’s said. “We continued to develop our Tu online offer and online sales of Tu clothing grew by 55% in the year. We have also launched Tu clothing on the Argos website for home delivery or collection from Argos stores and collection points in Sainsbury’s stores across the UK.”
Last week, UK Government watchdog the Competition and Markets Authority (CMA) blocked a proposed merger between Sainsbury’s and Asda after months of consultations, on the grounds such a deal would push up prices for consumers.
Thomas Brereton, retail analyst at GlobalData, says Sainsbury’s has had an undeniably testing year and must now “do something drastic” to demonstrate that it can stand up and dust itself off.