J Sainsbury (LON:SBRY) is expected to post a fall in sales when it updates investors on its first-quarter performance next week, Proactive Investors reports. The update will come after the Competition and Markets Authority blocked the group’s proposed merger with Walmart’s Asda earlier this year.
Sainsbury’s share price has climbed higher in London in today’s session, having gained 2.93 percent to 197.00p as of 14:38 BST. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.20 percent higher at 7,417.22 points. The group’s shares have given up more than 38 percent of their value over the past year, as compared with about a 2.6-percent fall in the Footsie.
Q1 update preview
Sainsbury’s is scheduled to update investors on its first-quarter performance on Wednesday and Proactive Investors reports that analysts expect first-quarter sales to have fallen slightly, given the tough comparatives in the prior-year period.
“With Q1 last year boosted by the football World Cup and a Royal Wedding, Sainsbury is up against a tough comparison – and that’s before we think about how the miserable weather has dampened sales,” Hargreaves Lansdown’s analyst George Salmon commented, as quoted by the newswire.
Chris Beauchamp, chief market analyst at IG, meanwhile commented in a note this week that in the longer-term, retaining market share will require cost cutting and price cuts, and while Sainsbury’s dividend is solidly covered at two times earnings, it would be unwise to increase it further given the uncertain outlook.
Latest Kantar data
The results will come after Kantar Worldpanel disclosed in a statement this week that Sainsbury’s had seen its sales fall by 0.6 percent in the 12 weeks to June 16, halving the rate of decline it registered last month, on the back of an increase in the number of affluent customers.
“The rise in wealthier shoppers bodes well for Sainsbury’s and its plans to shake up its fresh offer, which will place more emphasis on counters, bakeries and food to go,” Fraser McKevitt, head of retail and consumer insight at Kantar, elaborated, adding that “the retailer will be hoping this provides another reason for shoppers to visit”.