Sainsbury’s festive sales may have fallen but it could still be the best of the big supermarkets

Group sales fell by 0.7 per cent but CEO Mike Coupe’s business is showing signs of life, writes James Moore

Back in the money? Sainsbury’s Christmas trading was resilient (Reuters)

Given the recent history of Sainsbury’s, you could consider its festive trading update something of a result. It’s true that group sales falling by 0.7 per cent wouldn’t normally be considered anything to celebrate.

But Sainsbury’s was cast in the role of problem child among the big four grocery chains during much of last year, as its ambitious CEO Mike Coupe tried to pull off a mega merger with Asda that stood about as much chance of getting past the competition regulators as Jeremy Corbyn did of getting into Downing Street. Everyone knew that, with the exception of the extraordinarily well paid group of people directly connected to it.

Sainsbury’s day-to-day business clearly suffered as a result and it was reflected in the numbers the chain put out. But now the top team has its attention firmly fixed on the core offering, it’s starting to show some sings of life. This is something investors might care chew over alongside the leftover Taste the Difference turkey.

That so named premium range was a point of emphasis for the company, which recorded a modest (0.4 per cent) overall increase in grocery sales, but a much bigger increase in online sales. Clothes also did well.

The party was spoiled by Argos (down 3.9 per cent), the purchase of which was another Coupe deal but one he managed to get done. OK, officially the party was spoiled by “general merchandise” but everyone knows what that means.

Argos suffered in part through kids switching off toys in favour of switching on screens over Christmas. Toys are a big part of its business. Or they were.

So Coupe was left to talk about how well his baby did digitally. Fine and dandy, but it clearly needs work. There was much talk about more “integration” and “synergies” to that end and hopes of a happier Christmas next time around if the new games consoles due to debut this year do this business.

Any improvement would serve to further quiet down people like me who’d put Coupe on the corporate hot seat in the wake of the Asda disaster. Taken as a whole, these results have bought him some time.

The real problem with them is that from the perspective of the big four, they might be as good as it gets.

On Tuesday Kantar, the researcher, put out its regular quarterly snapshot of the market.

Its numbers are derived through monitoring the grocery purchasing habits of 30,000 demographically representative households across Great Britain. They tagged Sainsbury’s as the best of a bad bunch.

If they’re right, and they’re looking good as things stand, investors shouldn’t expect any late presents from Tesco or Asda when they come to report. Morrisons issued its festive update on the same day as Kantar and the best that could be said of it was that it wasn’t quite as bad as the City had feared.

Barclaycard’s latest spending data, out today, will underline the wider point. It shows a decline of 0.9 per cent among the supermarkets as a whole. The 4 per cent fall recorded by toys and computer game stores adds some context to that Argos result.

Overall spending, the card company said, rose by just 1 per cent, which if you account for inflation represents a reverse in real terms.

That Boris Johnson bounce everyone was talking about? There’s precious little sign of it on the high street or among the grocery chains and that doesn’t bode at all well for the economy given the hopes that were being pinned on consumers bailing it out, as they have during previous wobbles.