Sainsbury’s today reported a 3.6% increase in like-for-like sales in the fourth quarter as full-year like-for-likes rose 1.8%. The City reacted positively.
“Sainsbury enters its new financial year with a healthy exit rate. Whilst we cannot be certain, we do believe that the supermarket chain has not been impacted to the same negative extent as Tesco UK from recent meat contamination issues. In this respect, Sainsbury points out that it has been DNA testing for ten years and that it purchases all of its fresh poultry (although this may not mean frozen poultry and chicken used in ready-meals) from the UK, whilst all of its beef comes from the British Isles.
“In addition to its strong credentials for high quality and upper end mix, Sainsbury is also continuing to execute well in our view, being reasonably comfortable within its own corporate skin.” – Clive Black, Shore Capital
“Sainsbury’s’ continued outperformance is indicative of its strengthening appeal in a market characterised by polarised demand. The jewel in the crown of its strategy during the downturn has been own-brand development. The Basics and Taste the Difference sub-brands have boosted its position at the value and premium ends of the market respectively and the more recent re-launch of its mid-tier by Sainsbury’s range is appealing strongly to shoppers looking for quality alternatives to everyday brands. Importantly, own-brand development has served both to strengthen value perceptions, while at the same time reinforcing the grocer’s reputation for quality, innovative products.
“Furthermore, the grocer’s promotional focus has been astute; the introduction of brand match and its strong leveraging of Nectar for more targeted promotions, has been complemented by more creative campaigns such as feed your family. These investments have acted as bulwark against crumbling customer loyalty across the sector, helping Sainsbury’s to subdue the impact of a continued transfer of spend to the increasingly mainstream hard discounters and a resurgent Tesco.” – Joe Robinson, Conlumino
“We flagged yesterday, ahead of today’s fourth quarter update from Sainsbury (for the 10 weeks to March 16), that the market had moved from expecting about 1% like-for-like growth (including 0.5% from store extensions) to looking for over 2% growth, given the encouraging trends in the recent Nielsen and Kantar monthly grocery sales data. But we also noted that Red Nose Day last Friday will have given a bit of lift to trade at the end of the period, given Sainsbury’s sponsorship role, and this could be why the outcome was significantly better than expected, at 3.6% like-for-like (or 3.1% excluding extensions).” – Nick Bubb, independent retail analyst
“The statement builds on a strong Christmas performance, and the company confirmed that recent weeks have also been bolstered by Valentine and Mother’s Days. Meanwhile, online growth has seen a sharp spike, whilst the non-food businesses continue to develop apace.
“From an investment perspective, the healthy dividend yield of 4.1% is supportive and the general policy has been progressive. However, management outlook comments do not necessarily mirror the optimism which the numbers provide, and it will not have escaped the attention of the company itself nor indeed investors that Tesco currently means business. In addition, the stock still faces the twin drags of a lack of international diversification and the overhang of the Qatari stake, even though the latter is occasionally accompanied by vague bid speculation.” – Richard Hunter, Hargreaves Lansdown