Justin King, the chief executive of Sainsbury’s, was in jovial mood today (12 January) as the retailer, thought to have been the UK’s best-performing grocer over Christmas, posted record third-quarter results.
According to Kantar Worldpanel data, the retailer closed the gap on number two retailer Asda, and even managed to edge ahead of Wal-Mart Stores’ UK arm in the final four weeks of the quarter.
However, King insisted he “doesn’t spend any time thinking about” the league table for market share and instead preferred to highlight Sainsbury’s “best like-for-likes in the industry”.
King praised the performance of his staff over the Christmas period, saying that much of Sainsbury’s success was down to its strong preparation for snow in the week leading up to Christmas and coping once the snow fell.
Additionally, he referred to the chain’s “universal appeal” that he claimed allows customers to “do the shop they want” as a key contributor for the results. He said that over half Sainsbury’s baskets contain products from both the retailer’s premium own-label range Taste the Difference and its entry-level Basics range.
However, King’s focus remained on Sainsbury’s growth plans, and despite the third quarter being “a record breaking” one, with 700,000 square feet of new space opened, its growth plans continued apace. He said that the retailer has a “line-of-sight” for the next three years and that the retailer “continues to fill the hopper”.
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He said that due to Sainsbury’s lower market shares in areas like Scotland and Wales, and effective way of working with local communities, it often gets a favourable hearing for planning consents. He added that there is still plenty of space for the retailer to grow into, in places like Inverness, where the nearest Sainsbury’s store is in Aberdeen, some 100 miles away.
Despite the retailer’s strong results, shares in the chain were down 2.2% at 16:30 GMT today, falling to 382p a share. The analyst consensus rating on Sainsbury’s shares is ‘hold’ and RBS analyst Justin Scarbourough said he had changed his recommendation from ‘buy’ to ‘hold’ as the stock “had achieved our 370p price target”.
This recommendation was also echoed by Charles Stanley analyst Sam Hart, who said he sees better value in Tesco and Morrisons “for now”. However, both analysts said they “like” Sainsbury’s long-term prospects.