Shares in Sainsbury’s fell 5.78% to 310p today despite another strong Christmas trading update.
Even though sales rose, the main focus for investors was the weakness at Argos.
In its third-quarter trading statement for the 16 weeks to 3rd January 2026, the listed firm reported total retail sales (excluding fuel) up 3.9% year-on-year, with like-for-like sales up 3.4%.
Grocery continued to lead performance, with sales up 5.4% over the quarter and 5.1% during the six-week Christmas period, as the business won grocery market share for the sixth consecutive Christmas.
“We have won grocery market share for the sixth consecutive Christmas period, again delivering our winning combination of value, quality, service and availability for customers, said CEO Simon Roberts.
“When we strengthened our profit guidance in November, we said we planned to invest in the strength of our competitive position through the most important trading period of the year.
“We expected the market to become more competitive with customers spending more carefully and we invested in balanced choices to offer great value for money, outstanding quality and innovation and leading customer service and availability, both in store and online.
“More customers switched to Sainsbury’s, trusting us for both great value essentials and premium Taste the Difference products in their big Christmas shop and we were the only major grocer to grow items in the basket.”
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However, the update highlighted challenges at Argos, where sales declined 1% in the quarter and 2.2% over Christmas, reflecting what the company described as “significant headwinds from online traffic trends, a tough and promotional general merchandise market and weak consumer confidence”.
While Argos reported volume growth and gains in categories such as homewares, electricals and toys, this was more than offset by lower average selling prices, subdued demand for higher-ticket items and a weak gaming market.
Although the company reiterated that it expects retail underlying operating profit of more than £1 billion for the year and upgraded its free cash flow outlook to more than £550 million, markets reacted poorly to the lack of a stronger improvement.
On the more positive side, fresh food sales grew 8%, while Taste the Difference Fresh rose 15%, making it the fastest-growing premium own-label brand in the market.
Online groceries also performed strongly, with sales up 14%, supported by growth in OnDemand orders and higher basket sizes.
Convenience stores delivered a record Christmas, while the Nectar loyalty scheme continued to drive higher participation and customer savings.
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