What the analysts say: the verdict on Sainsbury's H1
Analysts gave positive views on Sainsbury's H1 results
Sainsbury's this morning (3 October) saw its share price climb as it booked an increase in first-half sales driven by own label growth and the roll out of its convenience stores. The results have come in ahead of analysts' expectations who have viewed the figures as "positive" and "solid".
Kate Calvert, Seymour Pierce retail research analyst
"For the 16 weeks to the end of 29 September, Sainsbury has reported Q2 total sales including petrol up 4.3% with LFL sales ex petrol up 1.9%. This is ahead of market expectations and we suspect will be a good performance relative to its peers. Sainsbury is benefiting from its recent investment in extensions, non-food (growth accelerated in period to three times food again) and its own brand. Its Price Match promise has been a good way of letting its customers know about its price credentials without having to join in the aggressive vouchering which others participated in over the summer.
We are maintaining our forecast for FY13E PBT GBP748m, EPS 28.6p (Fidessa consensus PBT £743m) and FY14E PBT GBP797m, EPS 30.4p (consensus PBT £807m)."
Joseph Robinson, senior Conlumino analyst
"Sainsburys' even more positive than anticipated update, represents a continued outperformance of the wider UK food & grocery market, with its keen focus on quality on a budget appealing strongly to current consumer sentiment. The grocer's investment in Paralympics sponsorship also left it well placed to piggy back on the success of the British sporting summer.
"Since the outset of the downturn, Sainsburys' utilisation of promotional activity has been skilful; with campaigns such as feed your family and brand match representing targeted, considered and sustainable investment.
"Own-label development is another facet of Sainsburys' strategy which has driven its outperformance. The re-launch of its ‘better' range under the by Sainsbury's sub-brand has helped the range to achieve its strongest growth in recent years, and the sub-brand appears to be mirroring the recent success of the grocer's Basics and Taste the Difference sub-brands. Crucially, own-label developed has served both to strengthen value perceptions, while at the same time reinforcing the grocer's reputation for quality, innovative products."
Cliona Lynch, Verdict Research analyst
"Sainsbury’s has posted solid growth for H1 of its 2012/13 financial year, with total sales up 4.1% and like-for-likes up 1.9%. Meanwhile, Tesco’s investment in recovering growth in its core UK business is showing signs of progress with its first positive l-f-l sales growth (Q2 +0.1%) in 18 months.
"Sainsbury’s top line was bolstered by the strong performance of convenience stores and online sales, demonstrating the importance of a multichannel strategy as shopping habits change.
"The instant coupon-at-till refund reassures Sainsbury’s shoppers that there is no need to switch away. ASA’s (Advertising standards authority) ruling on Brand Match, which relates to advertising now almost a year old and no longer in use, will not hamper the resonance of the message with customers.”
Tesco has once again ignited the price war with the launch of its Price Promise, garnering a mixed reaction from analysts who suggest it could just be an extension of other retail schemes or the retai...
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