Sainsbury’s share price: Analysts flags bad combination of problems for grocer

on May 4, 2017
Updated: Oct 21, 2019

J Sainsbury (LON:SBRY) is likely to continue to lose market share to discounters, analysts at Hargreaves Lansdown have warned. The downbeat comments came after the blue-chip grocer posted a rise in sales yesterday, helped by last year’s acquisition of Argos owner Home Retail Group.

Sainsbury’s share price has fallen into the red in today’s session, having lost 1.95 percent to 258.35p as of 14:26 BST, underperforming the broader London market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.12 percent higher at 7,243.00 points.
Hargreaves Lansdown analyst George Salmon commented yesterday that while Sainsbury’s partnership with Argos was working, that could not help the declines in the supermarket. The comments came after the blue-chip grocer delivered a 12.7-percent rise in full-year sales to £29.1 billion, mainly as a result of the contribution from the group’s recently acquired Argos business. The supermarket’s underlying profit before tax, however, inched one percent lower.

“Sainsbury’s ‘bread and butter’ remains its bread and butter grocery business,” the analyst pointed out, as quoted by Citywire, adding that discounters like Aldi and Lidl were “still making gains at the expense of the UK’s more established names, forcing prices downwards across the board”.
“Unlike its domestic rivals Tesco and Morrison, like-for-like sales at Sainsbury’s have remained stubbornly negative recently. Lower prices, weaker margins, and a falling market share? Not a good combination,” Salmon concluded.
The latest Kantar Worldpanel data meanwhile showed yesterday that Sainsbury’s grocery sales had climbed 1.7 percent in the 12 weeks ended April 23, with growth seen across all three channel, namely Local convenience stores, larger supermarkets and online. The retailer’s market share, however, dipped to 16.1 percent, reflecting stronger growth among its rivals.
As of 14:57 BST, Thursday, 04 May, J Sainsbury plc share price is 257.85p.

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