Tu Clothing outperforms for Sainsbury’s again in H1

Britain’s second-largest supermarket group appears to be on a roll and on Thursday it raised its full-year profit outlook after H1 sales and profit beat forecasts.

Retail sales, excluding VAT and fuel, rose 4.8% to £15.6 billion and it made retail underlying operating profit of £504 million, up 0.2%.

The company also has a major clothing and general merchandise business including Tu Clothing and Argos, so how did that do in the six months to mid-September?

Sainsbury’s General Merchandise & Clothing sales were up 3.3% to £804 million, while Argos sales were up 2.3% to £1.98 billion. Tu Clothing sales alone grew 7.8% in H1, outperforming the market for the fifth consecutive quarter, driven by range and availability improvements, strong online growth and its best-ever Back to School performance. 

In clothing it said that “our customer offer now combines great value with quality design and on-trend desirability, driving improved customer perception metrics. This has helped deliver an improvement in full-price sales”.

But general merchandise sales declined in line with expectations as it reduces GM space in stores to support its foods focus. This has improved trading intensity and profitability.

It said it’s making good progress with the Argos transformation plan, with higher sales, market share growth and improved profitability, particularly against a second quarter last year where strategic clearance activity increased sales but diluted trading margins. 

Sales growth was supported by warm and dry summer weather in an otherwise subdued, competitive and deflationary market. It continues to strengthen its online offer, improving the digital customer journey and driving higher online traffic and basket size. And it said it has a strong trading plan in place as it heads into the important Black Friday and Christmas trading period.