The results show that sales of toys, homeware and other non-food merchandise from Argos fell by 16% year-on-year.
Although Sainsbury’s has raised its full-year profit guidance to “at least” £720m before tax, up from £660m thanks to sales of food and drink, sales of toys and tech at Argos saw a huge decrease.
The retailer delivered strong Christmas results and growing market share, despite a fall in sales during the peak Christmas trading period.
In a statement, the company said that cost inflation had been offset by savings, driven by the closure of 420 Argos branches. This helped strengthen profits, along with better-than-expected grocery sales. The company said: “Our expectations for full year profits are ahead of previous guidance, with investment in the customer proposition and higher operating cost inflation offset by structural cost savings and stronger than expected grocery volumes, driven in part by increased in-home grocery consumption.”
However, overall like-for-like sales, excluding fuel and the effect of new shops opening, fell by 4.5% in the three months to 8th January, and general merchandise, which includes homeware, toys and other goods from Argos, fell by 16% year-on-year.
The group said that this was down to comparisons with a “strong performance” during lockdown the previous Christmas, as well as a company decision to offer fewer discounts.
The retailer revealed that global supply chain issues had also affected the availability of certain products.
Argos sales were more than 9% down in the company’s wider third quarter compared to the same period last year while the supermarket chain’s general merchandise performance was 20% lower.
However, CEO Simon Roberts remained upbeat, commenting: “I am really pleased with how we delivered for customers this Christmas. The backdrop was challenging and our teams worked hard throughout the year to make sure we had the products everyone wanted.”