What the analysts say - Sainsbury's sales driven by online and convenience
Sainsbury managed to deliver "strong" like-for-like sales growth
UK retailer Sainsbury's this morning (19 March) recorded an increase in like-for-like sales over the last ten weeks, helped by strong growth in online and convenience. Overall, analysts were upbeat about the figures that some believe have allowed the grocer to materially outperform its peers.
Conlumino analyst Joseph Robinson
"This is a highly impressive performance from Sainsbury’s, particularly considering the exceptionally difficult competitive backdrop and strong comparatives. The grocer’s pro-activity in responding to evolving consumer trends in grocery shopping has left it strongly placed to capitalise.
"The strong performance of Sainsburys’ online grocery (+20%) and convenience businesses (+18%) serves both to underline that these channels are representing the preeminent drivers of growth across the sector and Sainsburys’ continued success in taking advantage of these trends. Sainsbury’s is well placed to navigate a food & grocery market amid dwindling customer loyalty and where space growth is becoming markedly less effective in driving profitability."
Shore Capital analyst Clive Black
"Sainsbury has confirmed this morning that it has quite materially outperformed its major supermarket peers in the UK through its last quarter of the financial year with its Q4 trading.
"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."
Richard Hunter, head of equities for Hargreaves Lansdown Stockbrokers
"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."
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