Sainsbury's quarterly sales growth slows but heatwave boosts trading

By James Davey

LONDON, June 30 (Reuters) - Sainsbury's reported slower first-quarter underlying sales growth, echoing market leader Tesco, as tougher comparatives and weak non-food sales weighed, although it said trading in the current quarter had improved, helped by a recent heatwave.

The chief executive of Britain's No. 2 supermarket group, Simon Roberts, said that while Sainsbury's had made an "encouraging" start to the year, the impact of the Middle East conflict on its customers and business remains uncertain and could add to food inflation this year.

Sainsbury's, which has a UK grocery market share of 15.3%, said like-for-like sales, excluding fuel, rose 2.1% in its first quarter to June 20 - below the 3.1% achieved in the previous quarter.

Grocery sales rose 3.6%, while general merchandise and clothing sales fell 3.7% and sales at Argos fell 0.5%.

TOUGH COMPARATIVE PERFORMANCE

The group was up against a strong comparative performance in the first quarter last year when like-for-like sales rose 4.7%, boosted by favourable weather and cyberattack-related disruption at competitors Marks & Spencer <MKS.L> and the Co-op.

Analysts at Bernstein said Sainsbury's reported "an overall encouraging set of results with continued strength in grocery and better than feared Argos performance."

Shares in Sainsbury's were up 2.4%, extending gains over the last year to 15.4%.

Earlier this month, Tesco reported its first quarter like-for-like sales growth slowed to 1.8%.

About one quarter of Sainsbury's sales are non-food, making it more exposed than Tesco to any slowdown in discretionary spending.

RECORD JUNE TEMPERATURES

Last week's record June temperatures for the UK spurred trading.

"Demand really hit record levels. We had best ever sales weeks for pizza, for ice cream, for berries," said Roberts, adding that Argos also had a "very strong" week, driven by demand for fans and paddling pools.

He said the group was getting ready for another possible heatwave next week.

Sainsbury's kept its forecast for full-year 2026/27 total underlying operating profit of between £975 million and £1.075 billion ($1.29 billion to $1.42 billion). It made £1.025 billion in 2025/26.

Prior to Tuesday's update analysts were on average forecasting £1.061 billion for 2026/27.

(Reporting by James Davey; editing by Sarah Young and Louise Heavens)