Sainsbury's has reported that Q3 sales growth at Argos fell by 1.4% in the 16 weeks to 4 January, dampening its trading results for the Christmas period.

Overall, the chain’s retail sales increased by 2.7% year-on-year in the same period, with the supermarket’s sales increasing by 3.7%.

This was a result of being propped up by grocery sales, which increased by 4.1%. The group pointed towards its new Taste the Difference products for this increase, with premium range sales growth jumping by 16% in the Christmas week.

Sainsbury’s added that its second Nectar Prices Christmas delivered "outstanding value for customers", alongside "record Nectar sales participation".

Chief executive at Sainsbury’s, Simon Roberts, said: "We have won grocery market share for the fifth consecutive Christmas, with more customers choosing Sainsbury's for their big shop. Driven by our leading combination of quality, value and service, we have achieved seven consecutive quarters of volume performance ahead of the market and further accelerated our two-year volume growth.

"The strength of our customer service and operational performance stood us apart in delivering our biggest ever Christmas. Customers shopped later than ever and we achieved our highest ever sales in the final days before Christmas."

Although Sainsbury’s did state that it had seen "continued improvements" to its digital proposition, delivery offers and promotions during the Black Friday and Christmas weeks, this was offset by the "impact on sales and gross margins of subdued customer spending" outside of these periods.

Looking ahead, the supermarket said it continues to make "good progress" on its target to deliver £1bn of cost savings by March 2027 through investment in its customer proposition, productivity and operations.

In line with these results, Sainsbury’s now expects to deliver full-year retail operating profit "in line with consensus" and the midpoint of its £1.01bn-£1.06bn guidance range. This represents growth of around 7%.

Investment director at AJ Bell, Russ Mould, stated that the supermarket has "come on leaps and bounds" in recent years, "fighting off the competition from Aldi and Lidl at the discount end and enticing people at the upper end from Waitrose".

However, he concluded that the supermarket is still fighting the same battles as in previous years.

He said: "The story with Sainsbury’s is the same as it has been for the past year: Groceries are great, Argos less so. This would be fine if the supermarket chain wasn’t fussed with non-food interests, but Argos is a central part of its strategic growth plan so it has a problem on its hands.

"As it stands, the biggest part of its business is firing on all cylinders and the side attractions are the laggards, including clothing. Argos’ lacklustre performance has dragged for six consecutive quarters which in anyone’s book is a big warning sign.

"The backdrop is currently not supportive for Argos to thrive. Consumers are watching their pennies and non-essential items aren’t flying off the shelves. Quite how Sainsbury’s fixes the problem with Argos remains to be seen and it doesn’t feel like we will see a solution anytime soon."

---