Tu clothing outperforms market despite soft consumer demand

UK retailer J Sainsbury plc (Sainsbury’s) has reported a resilient performance for its fashion division, Tu clothing, in its third quarter trading statement for the 16 weeks to January 3, 2026. Despite a challenging backdrop of milder weather and subdued consumer spending, the brand achieved volume growth that surpassed the broader clothing market by 10 percentage points.

The retailer attributed the results to a strategic improvement in style and quality perceptions among consumers, alongside enhanced product availability across both its e-commerce platform and brick and mortar estate. Performance was notably robust within Christmas categories, where the brand recorded its highest ever sales of festive pyjamas.

Strategic investment drives market share

Simon Roberts, chief executive officer of Sainsbury’s, noted that the group prioritised balanced choices to maintain its competitive position during the peak trading period. While general merchandise conditions remained weak, the clothing division benefited from the ongoing Next Level strategy, which includes the reallocation of floor space to high-demand categories.

The group’s loyalty programme, Nectar, also played a role in supporting the wider retail ecosystem. During the festive period, customers saved an average of 27 pounds on their primary Christmas shop through Nectar Prices and personalised Your Nectar Prices. These initiatives contributed to record participation levels during the final weeks of the year.

Financial outlook and shareholder returns

Sainsbury’s remains confident in its momentum heading into the fourth quarter. The group has maintained its guidance for retail underlying operating profit, expecting it to exceed one billion pounds for the financial year.

Reflecting a strong working capital performance, the group has upgraded its retail free cash flow guidance to more than 550 million pounds, up from the previously forecast 500 million pounds. Sainsbury’s continues to expect a return of more than 800 million pounds to shareholders this financial year. This total includes ordinary dividends, a 250 million pounds special dividend, and a 250 million pounds share buyback.

Argos and general merchandise performance

The Argos transformation plan continues to progress, delivering volume growth despite headwinds from a promotional general merchandise market and lower online traffic trends. Although the average selling price across the market declined, Argos gained market share in electricals, toys, and homewares.

Habitat, the group’s homeware brand, saw sales increase by 6 percent, while the relaunched Chad Valley range grew by 7 percent. The group ended the peak period with a clean stock position due to disciplined inventory management.