- Sainsbury’s said the salary hike will be split into two separate increases
- The group achieved a 3.7% uplift in turnover over the six weeks to 4 January
Sainsbury’s plans to boost staff wages after strong demand for Taste the Difference products helped lift the retailer to record Christmas sales.
The supermarket giant said its staff would receive a 5 per cent pay hike over the coming year, split into two separate increases to help ‘navigate a challenging cost environment’.
Both Sainsbury’s and Argos employees will see their hourly wages rise to £12.45 in March, and £13.70 for those in London, before going up to £12.60 in August, and £13.85 for employees in the capital.
It follows a festive 3.7 per cent uplift in turnover over the six weeks to 4 January, including a 16 per cent boost in revenues at its Taste the Difference range.
Food sales soared by almost 40 per cent while over 200 champagne bottles were bought every minute in the ‘key days’ ahead of Christmas, Sainsbury’s said.
Demand for the FTSE 100 company’s general merchandise and clothing products expanded by 3.4 per cent, outperforming the market and all grocery rivals.
Simon Roberts, Sainsbury’s chief executive, said the firm enjoyed rising market share for the fifth consecutive festive season, as well as its seventh successive quarter of market-beating volume growth.
Wage rise: Sainsbury’s said its staff would receive a five per cent pay hike 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 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.’
The bumper festive performance helped Sainsbury’s like-for-like revenues increase by 2.8 per cent over the third quarter.
However, orders of clothing and general merchandise goods virtually flatlined due to the grocer’s greater focus on full-price seasonal sales and prioritising more space in stores to sell food.
It follows industry data published earlier in the week that showed non-food sales across the retail sector shrank 1.5 per cent in the final quarter of the year.
Argos sales shrank by 1.4 per cent following weaker demand for toys and bigger-ticket items, including furniture and larger consumer electronics.
This was despite a quarter of people in the UK visiting the retailer’s website over Black Friday weekend, which Sainsbury’s said was a ‘significant increase’ on the prior year.
Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, said: ‘Sainsbury’s is more exposed to general merchandise than its peers through its ownership of Argos.
‘General merchandise is the most cyclical area of the supermarket economy to be in, so being overweight in this arena really slows you down when times get tough.’
Nonetheless, Sainsbury’s expects its full-year retail underlying operating profits to be at the ‘midpoint’ of its £1.01billion to £1.06billion guidance range.
The business has also raised its financial services arm’s underlying operating profit outlook to £30million, compared to a previous estimate of between £15million and £25million.
Sainsbury’s shares were 2.4 per cent down at 257p on Friday morning, although they have still fallen by around 11 per cent over the past year.
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