Sainsbury's staff to get pay rise after bumper Christmas and market share win

Despite Sainsbury's announcing it had gained grocery market share for the fifth consecutive Christmas, with sales up nearly four per cent, shares experienced a slight dip on Friday morning. Simon Roberts, Sainsbury’s CEO, shared with investors: "half of big Christmas baskets contained a Taste the Difference product, helping Taste the Difference deliver sales growth of 16 per cent, outperforming all key competitors."

He also highlighted that party food sales at Sainsbury’s surged by almost 40 per cent and that during the crucial days before Christmas, over 200 bottles of fizz were sold every minute, with more than a third being from the Taste the Difference range, as reported by City AM.

During the six-week festive period, retail sales grew by 3.8 per cent compared to the previous year, while overall sales increased by 3.7 per cent. However, this did not prevent Sainsbury’s share price from falling over 2 per cent to 256.20p on Friday morning.

Richard Hunter, Head of Markets at interactive investor, commented: "share price reactions to the updates so far have been decidedly mixed, with investors choosing for some to ignore the success of the Christmas period and focus heavily on the undoubtedly challenging times to come."

In its announcement, Sainsbury’s attributed part of its growth to its Nectar card prices. The company also confirmed that it is on track to achieve an incremental profit of at least £100m in the three years leading up to FY26/27.

It has been disclosed that a quarter of the UK population visited the Argos website during the Black Friday weekend, marking "a significant increase year on year". The third quarter saw the most substantial sales in technology.

However, the toy market was weak, and customer demand in larger ticket categories, such as furniture and consumer electronics, remained subdued. The supermarket chain stated it is making "to make good progress against our target to deliver £1bn of cost savings by March 2027".

Sainsbury’s has informed its shareholders of a five per cent pay rise for retail colleagues this year, split into two increments in March and August. The group believes this move "will allow us to navigate a challenging cost environment while ensuring we continue to lead the sector in how we reward our brilliant colleagues".

Staff across both Sainsbury’s and Argos will see their hourly wage increase to £12.45 in March and £13.70 for those based in London, with a further rise to £12.60 per hour in August and £13.85 for those based in London. Roberts elaborated: "Our people are fundamental to achieving our next level Sainsbury’s plan and we are pleased to announce that we will raise pay for our hourly-paid colleagues by five per cent in the year ahead, split into two separate increases to help manage a particularly tough cost inflation environment."

"We believe in rewarding our colleagues well for delivering leading service and productivity and we will be the best paying UK grocer from March," he added. This statement follows Roberts' previous caution in November, where he warned that the government's national insurance hike would result in higher prices for shoppers by adding £140m to the supermarket’s costs.

"Within the supermarket sector, where prices are central to success, remaining competitive comes at a cost. For Sainsbury, the investment in lowering prices over recent times will come under additional pressure, especially following the outcome of the measures announced in the Budget," Hunter remarked. Looking ahead, the grocer anticipates delivering a full-year underlying operating profit "in line with consensus" and within the midpoint of the £1.01bn – £1.06bn guidance range.