Sainsbury’s staff set for 5 per cent pay increase after ‘biggest ever’ Christmas

As a result, it told shareholders on Friday it is on track to increase its profits for the year, in line with previous targets.

It came as Sainsbury’s said it will hand staff an inflation-busting 5 per cent pay increase in 2025 to help workers through a “particularly tough cost inflation environment”.

The increase, which will affect 118,000 hourly-paid workers, will see the minimum annual pay for a full-time worker outside London increase from £22,882 to £24,026 by August.

Sainsbury’s and Argos workers will see hourly pay increase from £12 to £12.45 in March, before rising again to £12.60 in August.

Workers in London will see pay increase from £13.15 to £13.70 in March, before lifting to £13.85 in August.

It comes ahead of the Government’s planned increase in the national minimum wage in April, which will rise by 6.7 per cent to a minimum of £12.21 per hour for workers over 21 years of age.

The new pay deal came as Sainsbury’s reported an increase in sales over the latest quarter.

The retail giant said overall group sales, excluding fuel, were up 2.7 per cent for the 16 weeks to January 4, driven by strong momentum in its grocery business.

It said grocery sales rose by 4.1 per cent for the period, as it increased its share of the UK grocery market further.

This included record sales volumes in the days shortly before Christmas as customers shopped later than usual.

Strong demand for groceries, helped by a nearly 40 per cent rise in sales of party food, helped offset a decrease in sales from its Argos arm.

The company said it is on track to meet its profit guidance for the year as a result, telling shareholders its retail underlying operating profits are likely to be towards the middle of its £1.01bn to £1.06bn range.

Simon Roberts, chief executive of Sainsbury’s, said: “Driven by our leading combination of quality, value and service, we have achieved seven consecutive quarters of volume performance ahead of the market and further accelerated our two-year volume growth.

“The strength of our customer service and operational performance stood us apart in delivering our biggest ever Christmas.

“Customers shopped later than ever and we achieved our highest ever sales in the final days before Christmas.”

Lucy Rumbold, equity research analyst at Quilter Cheviot, said: “The group remains confident in its ability to meet profit guidance, with expectations centred around the midpoint of forecasts, aligning with market consensus.

"While slightly below expectations, Sainsbury's performance highlights the ongoing challenges within non-food categories, but its strength in groceries positions it well to navigate the current economic climate.”