Disappointing Sales for Sainsbury's

Sainsbury's posts disappointing results as the supermarket finalises the acquisition of Argos owner Home Retail Group

Adam Kindreich, CFA 29 September, 2016 | 10:42AM

Supermarket J Sainsbury (SBRY) reported a disappointing trading performance for second-quarter 2017, the 16-week period ended September 24. Same-store sales fell 1.1% excluding fuel, which shows no improvement on previous periods. The weakness in sales was brought about by price cuts, while volumes are growing. The figures contrast with the accelerating sales for rival supermarket Morrison's (MRW), which reported a couple of weeks ago.

The acquisition of Argos could distract management from other challenges

The price cuts mark a change in Sainsbury's’ commercial strategy, with the firm moving away from promotions towards an everyday low price strategy. In our experience, this is a good thing, as it usually helps improve a store's price perception among customers and reduces complexity in the supply chain and logistics. The decrease in promotions was also linked to Sainsbury's’ attempts to help customers eliminate food waste by ending almost all multi-buy promotions in stores.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Morrison (Wm) Supermarkets PLC183.60 GBX-0.24
Sainsbury (J) PLC216.50 GBX0.00
Tesco PLC227.80 GBX0.04

About Author

Adam Kindreich, CFA  is an equity analyst for Morningstar

Audience Confirmation


By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites
© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies