Sainsbury’s is to increase wages as its Taste the Difference range takes the retailer to a Christmas record
- Sainsbury’s said the salary increase will be split into two separate increases
- The group achieved a 3.7% increase in turnover in the six weeks to January 4
Sainsbury’s plans to increase staff pay after strong demand for Taste the Difference products helped the retailer to record Christmas sales.
The supermarket giant said its staff would receive a 5 percent pay rise over the coming year, split into two separate increases to “cope with a challenging cost environment.”
Both Sainsbury’s and Argos workers will see their hourly wages rise to £12.45 in March, or £13.70 for those in London, before rising to £12.60 and £13.85 for workers in August the capital.
It follows a festive sales increase of 3.7 percent in the six weeks to January 4, including a 16 percent increase in sales across the Taste the Difference range.
Food sales rose by almost 40 per cent, while more than 200 bottles of champagne were bought every minute in the ‘key days’ before Christmas, Sainsbury’s said.
Demand for the FTSE 100 company’s general merchandise and clothing products grew by 3.4 percent, outperforming the market and all supermarket rivals.
Simon Roberts, CEO of Sainsbury, said the company saw its fifth consecutive festive season increase in market share, as well as the seventh consecutive quarter of market-beating volume growth.
Pay rise: Sainsbury’s said its staff would receive a five per cent pay rise over the coming year, split into two separate increases to ‘help navigate a challenging cost environment’
He added: “The strength of our customer service and operational performance sets us apart as we deliver our biggest ever Christmas.
‘Customers shopped later than ever and in the last days before Christmas we achieved our highest turnover ever.’
The festive performance saw Sainsbury’s like-for-like sales rise by 2.8 percent in the third quarter.
However, orders for apparel and general merchandise remained largely flat due to the grocer’s increased focus on full-price seasonal sales and prioritizing more space in stores to sell food.
This follows industry data published earlier this week which showed non-food retail sales contracted by 1.5 percent in the final quarter of the year.
Argos sales shrank 1.4 percent due to weaker demand for toys and higher-priced items, including furniture and larger consumer electronics.
This is despite a quarter of people in Britain visiting the retailer’s website over the Black Friday weekend, which Sainsbury’s said was a ‘significant increase’ on the previous year.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: ‘Sainsbury’s is more exposed to general goods than its peers through its ownership of Argos.
“General merchandise is the most cyclical part of the supermarket economy, so being overweight in this area really slows you down when times get tough.”
Nevertheless, Sainsbury’s expects full-year underlying operating profits to be in the ‘mid’ range of £1.01 billion to £1.06 billion.
The company has also raised the underlying operating profit outlook of its financial services business to £30 million, up from a previous estimate of between £15 million and £25 million.
Sainsbury’s shares were down 2.4 percent to 257 cents on Friday morning, though they are still down about 11 percent over the past year.
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