Sainsbury’s Share Price Dropped 5.5% on Q3 Results, Forecasts

The J Sainsbury plc (LON: SBRY) share price dropped 5.5% after releasing the trading statement for the third quarter of its financial year covering the 16 weeks to 6 January 2024. The company anticipates an underlying profit before tax for the fiscal year 2023/24 to be between £670 million and £700 million.

Throughout this financial year, the company consistently outperformed the market weekly, achieving volume growth that surpassed market trends, especially notable during the fourth consecutive Christmas season. 

The company attributed its success to consistently offering great value and service, the positive reception of the first Nectar Prices Christmas, and customers opting for higher quality products under the “Taste the Difference” range. 

Although Argos experienced a decline in sales before Christmas, it still performed better than the overall weak and highly promotional general merchandise market, especially compared to its exceptional performance in the previous year.

In the third quarter, Sainsbury's saw a 9.3% increase in grocery sales, with Christmas grocery sales up 8.6%. This rise is primarily due to more robust volume growth compensating for lower inflation rates. 

However, general merchandise sales dropped by 0.6% in the third quarter but showed a 1.5% increase when excluding the impact of the Argos closure in the Republic of Ireland. 

The Christmas period saw a 3.7% decrease in general merchandise sales, which decreased to 1.3% when excluding the Argos closure. This decline reflects last year's significant sales boost due to the postal strike and high demand for energy-saving products.

Clothing sales also experienced a downturn, with a 1.7% decline in the third quarter and a more pronounced 6.0% drop during Christmas. Despite these specific sector declines, third-quarter retail sales, excluding fuel, increased by 6.5%. 

Simon Roberts, the Chief Executive of J Sainsbury plc, said: “We've worked hard to really deliver for our customers this quarter and have grown grocery volumes ahead of the market for the fourth Christmas in a row. More customers are choosing to shop at Sainsbury's, recognising our determined focus on value, product innovation and service. This was our first Christmas powered by Nectar Prices, helping customers save an average of £16 on an £80 Christmas shop.”

J Sainsbury share price. 

Sainsbury’s share price dropped 5.50% to trade at 289.65p from Tuesday’s closing price of 306.50p.