UK Retailers Buoyed by Holiday Shopping Season

Retailers J Sainsbury, JD Sports and Dunelm all upgraded their earnings forecasts after they enjoyed a flurry of activity during the holiday shopping season, enough to overcome ongoing supply chain snafus and increasing costs of goods and services across the board during the COVID-19 pandemic.

Sainsbury’s, the second-largest supermarket chain in the U.K., said it expected to make at least 720 million pounds ($986 million) of underlying pre-tax profit in its current financial year, up from a previous forecast of 660 million pounds (almost $904 million) from July.

Clothing and footwear chain JD Sports expects full-year profit of 875 million pounds (almost $1.2 billion), up from a company compiled average of analyst forecasts of 810 million pounds ($1.1 billion). In April last year, it had predicted profits of 500 million pounds (almost $685 million).

As recently as September, the company “thought that Christmas and Black Friday may weaken us, but that did not prove the case,” said Executive Chair Peter Cowgill.

Home goods retailer Dunelm said sales in the 13 weeks leading up to Christmas were 13% higher than the previous year and 25% above pre-pandemic levels. Full-year profit would be “materially ahead of expectations” — currently 181 million pounds (almost $248 million) — due to strong sales and higher margins.

Sainsbury’s expected consumers to want to celebrate the holidays with family members and friends this year after not getting to do so in 2020 and adjusted their staffing levels, prices and volumes, said Chief Executive Simon Roberts.

For the six weeks through Jan. 8, grocery sales were 0.1% and 6.8% ahead of 2019. They were down 1.1% for the third quarter, better than the 2% decline expected by Citi analysts.

Related: 2 Retailers in 2 Days Say Omicron Dented Holiday Season Sales

Earlier this week, both Abercrombie and Lululemon told investors their fourth-quarter results would come in below their projections, moves that cast some doubt on the optimism in some circles about the retail sector’s recovery during the holiday shopping season.