Sainsbury Shares Slide Despite Q1 Sales Growth

Sainsbury's (LON: SBRY) shares fell over 1% at the open on Tuesday following its first-quarter trading statement. The supermarket giant reported sales growth in the quarter, driven by continued momentum in its grocery business and customer preference for its value offerings.

The company highlighted a second consecutive year of volume growth in groceries, indicating customers are responding positively to Sainsbury's focus on value, innovation, and quality. This growth comes even amidst inflationary pressures and challenging weather conditions.

Sainsbury's also achieved the biggest market share gains among all grocery retailers during the quarter. This positive trend reflects consistent customer switching, with more shoppers said to be choosing Sainsbury's for their main grocery shopping.

The company's general merchandise and clothing performance yielded mixed results, with sales declining 4.3% compared to last year. While the clothing sector witnessed improvement, seasonal general merchandise sales were weaker. 

Similarly, Argos sales declined by 6.2% due to a particularly strong comparative period and lower demand in consumer electronics, particularly gaming. Overall, Salisbury sales grew 4.2% year-on-year in Q1. 

Despite these pockets of softness, Sainsbury's remains confident in its full-year outlook. The company has commenced its previously announced £200 million share buyback program and expects to return at least £250 million to shareholders upon completion of the Sainsbury's Bank sale and finalisation of the Argos Financial Services model.

Sainsbury's maintains its FY24/25 Retail underlying operating profit forecast in the range of £1.01 billion to £1.06 billion, representing a growth of 5% to 10% compared to FY23/24. 

Commenting on the results, Simon Roberts, Chief Executive of J Sainsbury plc, expressed satisfaction with the company's grocery performance and early progress on its “Next Level Sainsbury's” plan. He emphasised Sainsbury's success in attracting customers from competitors and its commitment to delivering the best value and quality in the market.