Sainsbury's Blames 'Significant Headwinds' for Slump in Argos Sales at Christmas
Sainsbury's has pointed to "significant headwinds" from weak consumer confidence, heavy online competition, and widespread discounting as the main reasons behind a disappointing drop in sales at its Argos chain over the crucial Christmas period.
Despite selling more items overall, the average price of products across the market was lower due to subdued spending on higher-ticket items such as furniture. The company also attributed the decline to weak consumer confidence, particularly around gaming and promotional activities.
The UK's second-largest grocer reported a 3.4% increase in supermarket sales at established stores, but Argos saw a 1% drop in sales over the three-month period ending January 3. The chain performed particularly poorly in the final six weeks of the year, with total sales down 2.2% compared to the Sainsbury's chain's 4.6% increase.
Simon Roberts, the chief executive of Sainsbury's, called on the government to bring forward plans to crack down on tax breaks for low-priced goods exploited by online sellers based overseas, citing "significant headwinds" from online traffic trends and weak consumer confidence.
Roberts stated that shoppers had held back spending before the government's November budget, seeking value for money due to concerns about inflation and the cost of living. However, he believed food inflation had peaked as commodity prices stabilized, and labor costs became more manageable in 2026.
Despite this, Roberts emphasized that shoppers would likely continue to focus on price, and the market remained highly competitive. The company is expected to return over £800m of cash to shareholders this year, including a £250m special dividend.
In contrast, food sales soared for Sainsbury's, with fresh food sales rising 8% and its Taste the Difference range increasing by 15%. Online sales of groceries increased 14% in the quarter, driven by a rise in demand for rapid delivery.
Sainsbury's has pointed to "significant headwinds" from weak consumer confidence, heavy online competition, and widespread discounting as the main reasons behind a disappointing drop in sales at its Argos chain over the crucial Christmas period.
Despite selling more items overall, the average price of products across the market was lower due to subdued spending on higher-ticket items such as furniture. The company also attributed the decline to weak consumer confidence, particularly around gaming and promotional activities.
The UK's second-largest grocer reported a 3.4% increase in supermarket sales at established stores, but Argos saw a 1% drop in sales over the three-month period ending January 3. The chain performed particularly poorly in the final six weeks of the year, with total sales down 2.2% compared to the Sainsbury's chain's 4.6% increase.
Simon Roberts, the chief executive of Sainsbury's, called on the government to bring forward plans to crack down on tax breaks for low-priced goods exploited by online sellers based overseas, citing "significant headwinds" from online traffic trends and weak consumer confidence.
Roberts stated that shoppers had held back spending before the government's November budget, seeking value for money due to concerns about inflation and the cost of living. However, he believed food inflation had peaked as commodity prices stabilized, and labor costs became more manageable in 2026.
Despite this, Roberts emphasized that shoppers would likely continue to focus on price, and the market remained highly competitive. The company is expected to return over £800m of cash to shareholders this year, including a £250m special dividend.
In contrast, food sales soared for Sainsbury's, with fresh food sales rising 8% and its Taste the Difference range increasing by 15%. Online sales of groceries increased 14% in the quarter, driven by a rise in demand for rapid delivery.
. It's interesting that Sainsbury's is seeing an increase in supermarket sales, but Argos is struggling to keep up 
. The fact that shoppers are prioritizing price over quality or luxury items is definitely a challenge for retailers 
. I think it's smart of Simon Roberts to call out the government on tax breaks for online sellers, though - it could make a real difference in the long run 
. On the bright side, Sainsbury's is doing well with its fresh food sales and Taste the Difference range 
!
, it's like they're blaming everything on the consumers 
. first, weak consumer confidence, then online competition, and now tax breaks 
. can't even sell some basic stuff without complaining 
. but, i guess that's what happens when you're struggling to stay afloat 
, sainsbury's 
. and, hey, at least they're expecting a sweet return on cash 
.
. The whole market's been feeling it with all the online competition and discounts everywhere 
.
. I think that's because food prices have kinda leveled out after peaking last year 
. And their online sales are looking pretty strong too, especially with all the rapid delivery stuff 
.
. Maybe get creative with their sales and promotions? 
... Sainsbury's did alright at the supermarket, but Argos is like a specialty store, you know? They can't compete with Amazon on everything 
... And honestly, who doesn't love a good discount? 
It's not like they're not selling anything, just the types of things that sell for a lot are being held back due to consumer confidence 
... Sainsbury's is just trying to spin their failure as someone else's problem - the government needs to step up and address those tax breaks for online sellers. It's not like they're doing anything themselves to improve Argos' sales... 1% drop in sales over Christmas? That's a disaster