Sainsbury’s share price: Grocer expected to report drop in profit

Results to come amid ongoing restructuring

Sainsbury’s share price: Grocer expected to report drop in profit

J Sainsbury (LON:SBRY) is expected to report a decline in profits when it updates investors on its interim performance this week, City A.M. has reported. The results will come amid ongoing restructuring at the blue-chip supermarket.

Sainsbury’s share price fell on Friday, shedding 0.80 percent to 235.10p, underperforming the broader UK market, with the benchmark FTSE 100 index adding 5.03 points to end the session 0.07 percent higher at 7,560.35. The group’s shares have lost more than seven percent of their value over the past year, and are down by some five percent in the year-to-date.

Sainsbury’s to post sales decline

Sainsbury’s is scheduled to post its half-year results on Thursday and City A.M. reports that consensus estimates predict that Britain’s second-largest supermarket chain will report that its underlying profits before tax fell to £241 million. The results will come as the company continues to restructure its grocery business as well as Sainsbury’s bank, alongside integrating Argos which it acquired last year.

The results will follow the latest Kantar Worldpanel data which recently showed that sales at the grocer had climbed 1.9 percent in the 12 weeks to October 12. The group’s market share, however, dipped 0.2 percentage points to 15.8 percent, with German discounters Aldi and Lidl continuing to pressure the UK’s ‘Big Four’ supermarkets.

Analyst ratings

Deutsche Bank recently reiterated its ‘hold’ rating on Sainsbury’s, valuing the shares at 300p, while Shore Capital continues to see the grocer as a ‘buy,’ without specifying a price target on the shares. According to MarketBeat, the company currently has a consensus ‘hold’ rating and an average valuation 260.31p.

Berenberg meanwhile remains bullish on the blue-chip grocer, arguing that any weakness in Sainsbury’s share price following Thursday’s results could make a good entry point for investors. 

As of 07:59 GMT, Monday, 06 November, J Sainsbury plc share price is 234.60p.

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