Sainsbury's (JSAIY) revealed better-than-expected third-quarter results Wednesday even as its CEO cautioned that the impact of a Brexit-weakened pound on Britain's second-largest supermarket is still unknown.
Sainsbury's shares surged 5.56% to the top of the FTSE 100 leaderboard, changing hands at 273.2 pence by 9:45 a.m. GMT and extending its 52-week advance to 10%. The FTSE 350 Food and Drug Retailer Index was up 0.51% at 3,209.02.
Sainsbury's, which completed its acquisition of Argos-owner Home Retail last year, said total sales excluding fuel were up 0.8% for the 15 weeks to Jan. 7 and like-for-like retail sales were up 0.1%. This was ahead of analysts' consensus forecast of a fall of 0.8% and a second-quarter decline of 1.1%.
Online grocery sales grew by 9% in the quarter, with sales through its various websites making up 18% of total group sales in the quarter.
While the market has hailed this as good news, the U.K.'s No. 2 supermarket could be in for a challenging year.
"The supermarket business failed to generate any sales growth on its own. However against a backdrop of food deflation, flat sales are a pyrrhic victory for the supermarket, and represent an improvement on performance so far this financial year," Hargreaves Lansdown senior analyst Laith Khalaf said in a statement.
Industry data from Kantar Worldpanel released Tuesday showed that Sainsbury's was the only London-listed Big Four supermarket to see sales fall in the 12 weeks to Jan. 1. Sales were down 0.1% to £4.6 billion, compared with Tesco (TSCDY) and Morrisons (MRWSY) which saw sales up 1.3% and 1.2% respectively.