Sainbury’s Tu clothing reports drop in full year sales

Sainsbury’s Tu clothing sales decreased by 3 percent to 1 billion pounds for the year ending March 4, 2023.

The company said clothing sales growth was adversely impacted by a first quarter that annualised elevated sales the prior year when Covid-19 restrictions closed non-essential retail stores.

Tu’s full-price sales now make up 80 percent of the clothing sales, up 15 percentage points versus pre-pandemic and the company is now working with more online third-party brands including Sosandar, Little Mistress and Finery

Commenting on the trading update, Simon Roberts, chief executive of J Sainsbury plc, said in a release: "We are two years into our plan to put food back at the heart of Sainsbury's and have focused our efforts on reducing costs right across the business, which has enabled us to make the right decisions for our colleagues and customers. At the same time, we have improved the performance and profitability of Argos, Tu, Nectar and Financial Services so that we can invest further in the areas that customers and colleagues care about most.

Retail sales at J Sainsbury plc rose 5.2 percent, while excluding fuel sales were up 2 percent. Statutory group sales increased 5.3 percent. In the fourth quarter, excluding fuel, retail sales were up 7.1 percent and 7.8 percent like-for-like.

General merchandise (GM) sales for the year were down 0.4 percent, with Argos gaining share in a weak general merchandise market. Fourth quarter GM sales increased 7.6 percent with Argos sales up 9.3 percent.

Underlying pre-tax profit (UPBT) of 690 million pounds, was down 5 percent and at the top end of 630 million pounds to 690 million pounds guidance range and up 18 percent versus 2019/20 pre-pandemic UPBT of 586 million pounds.

Statutory pre-tax profit was 327 million pounds versus 854 million pounds last year. Underlying earnings per share of 23 pence, were down 9 percent and basic earnings per share of 9 pence, were down 70 percent.

The company’s board has proposed a final dividend of 9.2 pence, with a full-year dividend of 13.1 pence, in line with last year.

The company projects UPBT between 640 million pounds and 700 million pounds in FY 2023/24.