Following last week’s annual results from Sainsbury’s, broker MF Global said it is concerned that the grocer’s operating margin is benefiting more from lower depreciation, lease and staff costs than productivity on higher sales growth.

Sainsbury’s reported pre-tax profits up 9% to £665m in the year to March 19 on sales up 5.7% at £21.1bn, but MF Global has cut its forecast for the current year by 6.7% to £698m, 3% below consensus.

MF also noted market share loss in core regions such as London, the Midlands and South, which could offset gains in Scotland, the Southwest and Northeast.

Oriel Securities was more upbeat, describing last week’s profit figure as a “top of the range” outcome and the operating margin momentum as solid, though
“held back by the immaturity of the estate”.

Oriel, advising hold, said: “We would not expect the existing [share price] trading range of 335p to 365p to change much in the foreseeable future.”