Hargreaves Lansdown argues that J Sainsbury (LON:SBRY) has posted disappointing Christmas sales and shareholders will instead be looking for a gift of approval of the tie-up with Asda, Citywire reports. The comments came after the blue-chip supermarket revealed yesterday that its total retail sales had fallen in the 15 weeks to January 5.
Sainsbury’s share price, however, reacted positively to the update, gaining 2.29 percent to close at 272.60p. The shares outperformed the broader UK market, with the benchmark FTSE 100 index closing 0.66 percent higher at 6,906.63. This morning, the shares have extended gains in early trade, having added 0.51 percent to 274.00p as of 08:01 GMT, as compared with a 0.34-percent fall in the Footsie.
HL weighs in on update
Citywire quoted Hargreaves Lansdown analyst George Salmon as calling Sainsbury’s latest results ‘disappointing,’ arguing that the grocer’s like-for-like sales were ‘stalling,’ while “the relentless rise of the discounters means Sainsbury’s market share is under pressure despite its best efforts to hold prices down”.
“All the while, the general merchandise division, recently beefed up by the acquisition of Argos, is suffering the same pitfalls as other non-food retailers,” the analyst continued, arguing that investors would now be hoping for some good news from the Competition and Markets Authority, which will rule on the deal with Asda.
“Chief executive Mike Coupe expects savings and synergies to boost profits by at least £500 million, and it won’t have gone unnoticed that Asda looks to have had a pretty good Christmas,” Salmon concluded.
Latest Kantar data
Sainsbury’s results came after earlier this week, Kantar Worldpanel revealed that the company’s UK grocery sales had fallen 0.4 percent in the 12 weeks to December 30. The group’s market share meanwhile dipped 0.3 percentage points. Asda meanwhile achieved 0.7-percent growth in sales, coming out on top among the UK’s ‘Big Four’ supermarkets.