Bonfire night may be just around the corner, but don’t expect too many fireworks from Sainsbury’s when it updates the market this week.
Amid a turbulent grocery landscape, Sainsbury’s hasn’t fallen off the same cliff that Tesco, Asda and Morrisons have done at various points over the past five years, allowing it to emerge as the most resilient, if not standout, member of the big four.
Although its underlying pre-tax profits have fallen in each of its previous three financial years as the supermarket sector adjusts to rapidly-changing consumer habits, top line sales at Sainsbury’s, and its stock, have remained relatively robust.
At the time of writing, its 243.3p share price was down only slightly from 245.5p three years ago.
The grocer might not be lighting up the skies with a spectacular profit display or market-beating sales growth, but there is a lot to be said for holding steady in the current macroeconomic climate.
As one retail boss put it to me earlier this year, “flat is the new growth”.
Yet chief executive Mike Coupe has a vision to rebuild profitability over the next “three to five years” as he bids to create “a business for the future” – and it is a strategy that should encourage the City.
Yes, there is some work to be done in stores when it comes to the bread and butter of the grocery business at Sainsbury’s.
Availability is not what it could be, allowing Tesco to steal a march in terms of reducing the number of gaps on shelves.
And Sainsbury’s premium Taste the Difference proposition will face another stern test in the coming weeks after a below-par golden quarter in 2016 – a period when it has historically come into its own.
Competition from rivals such as Tesco, Morrisons and Aldi will be even tougher this Christmas as they continue to invest in the quality and depth of their top-tier grocery ranges.
But Coupe and Sainsbury’s Argos boss John Rogers are rapidly broadening the group’s horizons beyond food.
Indeed, the number of strategic initiatives implemented since its last update in July alone – when the group’s first-quarter like-for-like sales advanced 2.3% – serve to illustrate the pace at which Sainsbury’s is now moving.
In the summer, it launched a pilot of a UK first – a 30-minute click-and-collect grocery service – as it takes the fulfilment fight to its rivals.
“The grocer might not be lighting up the skies with a spectacular profit display or market-beating sales growth, but there is a lot to be said for holding steady in the current macroeconomic climate”
It is in the process of rolling out an Argos click-and-collect service to 100 Sainsbury’s Local stores and has ramped up Habitat’s digital offer, giving shoppers the option of picking up small homeware products ordered online from over 2,300 locations.
And just a fortnight, it added a formal menswear range to a Tu clothing brand that is already growing at speed, despite a challenging fashion market.
Sainsbury’s has taken some tough decisions, too.
It pulled out of the race to acquire Nisa amid concerns the deal could spark greater than expected scrutiny from the competition watchdog.
And last month the supermarket giant revealed plans to axe 2,000 jobs across its human resources and payroll departments as it ramps up efforts to “transform” its operations and be fit for the future.
Sainsbury’s is arguably doing more than any of its big four rivals to achieve that aim.
The grocer may well be lighting the right fuses to ignite earnings growth, but it will take some time for the share price to sparkle.