Sainsbury’s reported a stronger start to its financial year as grocery sales growth and continued market share gains helped lift Q1 revenue.

Revenue rose 2.7% to £9.2bn in the 16 weeks to 20 June, with retail sales excluding fuel also up 2.7% and like-for-like sales increasing 2.1%, versus 4.7% in last year’s comparative period.

Grocery sales climbed 3.6%, supported by strong fresh food performance, where sales rose 5%, while online grocery sales jumped 12.5%.

General merchandise remained more subdued, with Argos sales slipping 0.5% as weaker consumer spending weighed on average selling prices despite volume growth of 2.2%.

The demand was attributable to sales of home and toy products, alongside strong trading in fans during May’s heatwave and large-screen televisions ahead of the World Cup.

The supermarket group said it continued to outperform the wider grocery market, helped by its Aldi Price Match programme and Nectar Prices promotions. Digital engagement also increased, with almost one million additional customers regularly using Digital Nectar, supporting growth in its Nectar360 retail media business.

The company continued to invest in efficiency initiatives, including AI-led stock forecasting and route planning, and said it remained on track to deliver £1bn of cost savings over the three years to March 2027.

Sainsbury’s shares rose around 2.5% in early trading on the update.

Sainsbury’s also expanded the use of facial recognition technology to tackle retail crime, rolling the system out to more than 55 stores after a trial in which more than 90% of identified offenders did not return. Up to 150 additional stores are planned before Christmas.

Simon Roberts, CEO, said: “Customers are looking for value more than ever and more people are choosing Sainsbury’s for their big weekly shop, driving continued volume growth and market outperformance.”

The retailer maintained full-year profit guidance despite ongoing economic uncertainty. It forecasts total underlying retail operating profit of £975m to £1.075bn and reiterated expectations for retail free cash flow of more than £500m, but warned that the impact of conflict in the Middle East remained uncertain.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said Sainsbury’s had delivered "a solid start to the year", with grocery sales outpacing the broader market and pushing the top line higher.

"While the UK food market is proving resilient overall, Sainsbury’s is more exposed to general merchandise than its peers through its ownership of Argos. For now though, a strong grocery performance is offsetting weakness elsewhere, which saw Sainsbury’s reiterate its cautious full-year profit guidance," Chiekrie said.

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