Sainsbury's Posts 2.3% Increase In Like-For-Like Sales In Q1

An employee moves shopping trolleys in

The UK's second largest supermarket saw like-for-like sales at older stores up by 2.3 percent in the 16 weeks to July 1, well ahead of the 0.3 percent it recorded previously.

Online sales rose by 8% in the period, driven by increase online traffic at its Argos business.

Demand for deals on British strawberries and its summer eating range added to Sainsbury's grocery sales, which were up 3%.

J Sainsbury PLC (SBRY.LN) said Tuesday that first quarter sales rose and that it remains on track to achieve 145 million pounds ($188.18 million) of cost savings in the current financial year, as part of the company's three-year GBP500 million cost savings program.

But Laith Khalaf, senior analyst at Hargreaves Lansdown, said despite the strong results, the bigger picture remained challenging for the United Kingdom supermarkets as weaker sterling is pushing up food prices and the trading environment remains as competitive as ever.

Sainsbury's is thought to be close to acquiring local store chain Nisa in a potential £130m deal - and there are also rumours of negotiatiosn with convenience chain McColl's.

The update comes amid reports that the United Kingdom grocer is eyeing a takeover of convenience store chain Nisa. The group's shares have added just under 10 percent to their value over the past year, and are up by more than one percent in the year-to-date.

The food sales rebound comes as a welcome boost to Sainsbury's, which warned in May over pressures from falling consumer confidence as inflation starts to bite.

It has been offsetting this thanks to the addition of the Argos business, snapped up past year when it took over Home Retail Group for £1.4 billion.

Laith Khalaf, an analyst at Hargreaves Lansdown, said: "The recent heatwave helped to boost sales at Sainsbury's group, as customers turned to the Argos website to buy electric fans and paddling pools to keep cool in the hot weather".

Food price inflation also contributed to a rise in sales at the supermarket's checkouts.

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