Sainsbury’s: New Habitat brand focus; sales update; £1bn eco push

Argos and Habitat owner Sainsbury’s has revealed a slight fall in full year sales as well as providing an update on its recent performance.

According to its preliminary results for the 52 weeks to 7 March 2020, group sales were down 0.1% to £32.3bn from £32.4bn, with like-for-like sales down 0.6%.

General Merchandise, including Argos and Habitat, sales were down 2.9% to £6.4bn from £6.5bn.

Underlying profit before tax was down 2% to £586m, with Retail underlying operating profit down 4% to £938m.

Sainsbury’s said that it has made further progress to bring its Sainsbury’s and Argos ranges and buying and merchandising teams together, enabling customers a ‘more integrated product offer’ in its stores and online.

The group added that its Habitat brand is available in five stand-alone stores, 11 stores in Sainsbury’s supermarkets and online, which accounts for over 68% of its sales.

“We launched Habitat’s first ever spa fragrance collection, sold exclusively in Sainsbury’s stores and online in time for Christmas gifting, as well as a range of Habitat branded floral products,” Sainsbury’s said.

Continuing: “We see opportunities to further grow the Habitat brand and we will integrate Habitat into our home and furniture business and increase the accessibility and appeal of the brand.”

During the year Argos opened 25 new stores in Sainsbury’s and one new standalone and closed 25 standalone Argos stores and two Argos in Homebase stores.

The number of Argos collection points in Sainsbury’s stores reduced from 317 to 281. As at 7 March 2020, Argos had 882 stores and 281 collection points. Habitat had 16 stores, of which 11 are in Sainsbury’s.

Looking ahead, Sainsbury’s expects to open 35-40 Argos in Sainsbury’s, and close around 50 Argos standalone stores.

Taking a closer look at recent trading within Argos, Sainsbury’s revealed higher sales in the early days of lockdown, as customers equipped themselves for home working and spending more time in their homes.

“Growth has moderated in recent weeks following this early lockdown preparation activity and, since 24 March, has been impacted by the closure of all Argos standalone stores and reduced sales of items such as washing machines and furniture, due to colleagues no longer being able to enter customers’ homes,” Sainsbury’s said.

In figures, this translates to a 9% increase in sales over the seven week period to 25 April, with its most recent week in that period seeing sales rise 14%. Weeks four and six saw declines of 10% each – the most Argos has suffered during this time.

Mike Coupe, CEO, said: “The last few weeks have been an extraordinary time for our business. This is an unsettling time for everyone, but I am incredibly proud of the way the business has responded, continually adapting and responding to customer feedback.”

In other news, Sainsbury’s has committed to invest £1bn over 20 years to become Net Zero across all its operations by 2040.

Driving its sustainability message, the group said it has ‘seven key areas of focus’ and will report progress against each of them at its interim results in November.

On top of this, it has planted nearly four million trees in partnership with the Woodland Trust since 2004 and expects to plant more than 1.5 million trees by 2025.