Sainbury issued a promising trading statement last week but why no mention of margins? It's not alone with all the other multiples reluctant to cover margins in their quarterly updates. Good see that Marks gives them a mention.
Commentary at www.investorschampion.com

well the city does not like the budget

Supermarket chain Sainsbury reports annual profits on Wednesday -

- Of all of the big four supermarkets, Sainsbury's appears to faring the best. Only last week Morrisons published its first like-for-like sales fall in seven years, and Tesco 's woes have sent shock waves through the industry.

However, though trading appears to have been ticking along nicely at Sainsbury's, the figures are a little deceptive. In the last quarter of its financial year, sales increased by 2.3pc on a like-for-like basis. This is stronger than all of its competitors, but the measure includes the benefit of store extensions.

Some analysts fret that the company is spending too much about £1bn a year on capital expenditure and it should take a hint from Tesco and scale back its investment programme.

Justin King, chief executive, is unlikely to cut capital expenditure, but he is expected to highlight how tough the market remains.

Final Results.

Good sales and profit performance; outperforming the market

Financial summary

· Total sales (inc VAT) up 6.8 per cent to £24,511 million (2010/11: £22,943 million)
· Total sales (inc VAT, ex fuel) up 4.5 per cent, like-for-like sales (inc VAT, ex fuel) up 2.1 per cent
· Underlying profit before tax up 7.1 per cent to £712 million (2010/11: £665 million) (1)
· Underlying basic earnings per share up 6.0 per cent to 28.1 pence (2010/11: 26.5 pence) (2)
· Return on capital employed of 11.1 per cent (2010/11: 11.1 per cent) (3)
· Proposed full year dividend of 16.1 pence, up 6.6 per cent, cover 1.75x (2010/11: 15.1 pence, cover 1.75x)

Statutory

· Revenue (ex VAT, inc fuel) up 5.6 per cent to £22,294 million (2010/11: £21,102 million)
· Profit before tax down 3.4 per cent to £799 million (2010/11: £827 million)
· Basic earnings per share down 7.0 per cent to 32.0 pence (2010/11: 34.4 pence)

Operating highlights

· Outperformed the market, increasing market share to 16.6 per cent, the highest for nearly a decade (4)
· Price perception on branded groceries improving, driven by Brand Match
· New contract signed with Nectar, a key source of customer insight and loyalty
· Delivered over £100 million of operational cost savings
· Improved underlying operating margin by 4 bps (10 bps at constant fuel prices)
· Sector leader in FTSE4Good Index; top sector scorer across all dimensions
· Supermarket of the Yearand Convenience Chain of the Year at the 2011 Retail Industry Awards

Strategy highlights

· Great food: Good growth in our own label ranges, with Taste the Difference up 8.2 per cent and basics up 6.8 per cent. Over half way through re-launch of our core by Sainsbury's range with 3,700 products new or improved
· Compelling general merchandise and clothing: Continues to grow faster than our food business, gaining market share
· Complementary channels and services: £1.3 billion convenience business growing total and like-for-like sales well ahead of the market. Fastest-growing online food retailer with 20 per cent growth, now a £0.8 billion business. Click & Collect in over 900 stores with around 50 per cent of general merchandise orders now through this channel
· Developing new business: Sainsbury's Bank enjoyed another successful year with a 40 per cent increase in pre-tax operating profit
· Growing space and creating property value: Opened a further 1.4 million sq ft of gross space, adding 19 new supermarkets, 73 convenience stores and 28 store extensions. Property now valued at £11.2 billion(5)

..Questor share tip: J Sainsbury is focus on what matters for shareholders

By Garry White | Telegraph – 8 hours ago

Sometimes going all-out for growth is not in a company's best interests. The decision by J Sainsbury to slow its rate of store opening looks good for investors.

J Sainsbury 305.3p +4 Questor says BUY

The company has undergone a significant growth spurt in recent times, with retail space growing by a quarter over the past four years. The supermarket group will now expand its floor space by about 5pc a year. This will allow a better focus on cash management that should reward shareholders through higher dividends.

Indeed, Sainsbury (LSE: SBRY.L - news) is already yielding a tidy amount. In the year to March 2013 the prospective yield is 5.4pc, rising to 5.8pc next year. This should continue to support the share price.

Areas where the business is now focusing for growth are its convenience store format and its online offering.

Britain's third-largest grocer has lured shoppers into its stores with cheaper own-brand labels and has also gained market share in non-food. This meant that it managed to outperform the market over the past year, raising its market share to 16.6pc, the highest for nearly a decade.

In the year to March 17, total sales including VAT jumped 6.8pc to £24.5bn, although pre-tax profits slipped to £799m from £827m. However, when one-off items are excluded, profits rose 7.11pc to £712m.

The final dividend of 11.6p will be paid on July 13. This brings the annual payout to 16.1p, a rise of 6.6pc. Sainsbury now plans to increase the dividend cover to 2 times from 1.75 over the medium term, which will add to its already significant yield.

Of course, there are risks. The sector is getting increasingly competitive, with Tesco (LSE: TSCO.L - news) determined to fight back after its January profit warning.

The shares are trading on a March 2013 earnings multiple of 10.7, falling to 9.8 the following year. The average price target of the 13 City analysts monitored by Bloomberg is 311.15p, only marginally above current price.

First (OTC BB: FSTC.OB - news) tipped at 297.6p on November (Stuttgart: A0Z24E - news) 10 last year, and with the renewed focus on shareholder returns following the reining back of expansion plans and the support offered by the current yields, Questor remains confident with a buy rating

next week will see another instalment in the battle between supermarket giants Sainsbury and Tesco as both issue trading updates. Panmure Gordon thinks Sainsbury's headline numbers will look a lot better than Tesco's, especially as Sainsbury's figures will include the benefit of the jubilee week-end. "We look for like-for-like sales growth of just over 2% (ex-fuel), compared with 2.6% in Q4 and 1.0% in Q1 last year. This would equate to similar two year growth to that achieved in Q4 (excluding the impact of VAT)," Panmure Gordon said.

Acquisition


Sainsbury's has today announced the acquisition of HMV Group plc's shareholding in Anobii Limited, a social network and online retailer of e-books. As a result of the transaction and Sainsbury's investment in the future development of the business, it is anticipated that Sainsbury's will have a 64% stake in Anobii.

Trading Statement.

First Quarter Trading Statement for the 12 weeks to 9 June 2012

Good sales performance in a challenging market

· Total sales for first quarter up 3.6 per cent (3.8 per cent excluding fuel)

· Like-for-like sales for first quarter up 1.4 per cent (1.4 per cent excluding fuel)

· Continued strong growth in convenience and online

Rumours yesterday that Qataris may be mulling a fresh bid. They own 26% of the retailer. They may be contemplating making a proposal of between 450p - 500p a share for the supermarket.

:-))

Trading Statement

Good sales delivering continued outperformance

· Total sales for second quarter up 4.3 per cent (4.4 per cent excluding fuel)

· Like-for-like sales for second quarter up 1.9 per cent (1.9 per cent excluding fuel)

· Total sales for the first half up 4.0 per cent (4.1 per cent excluding fuel) and like-for-like sales up 1.7 per cent (1.7 per cent excluding fuel)

Written off in the past, Sainsbury's is now catching up fast. The supermarket has been increasing sales one quarter after another for eight years. The shares now trade at their highest point in over a year.

The most encouraging aspect of Sainsbury's renaissance has been its success in growing market share. The most recent survey from Kantar Worldpanel showed Sainsbury's has a 16.6% share of the domestic groceries market.

Despite this success and peer outperformance, few analysts currently rate Sainsbury's shares a buy. It could be that confidence in the sector as a whole has been hit by turbulence at Tesco.

Half Yearly Report

Financial summary

· Total sales (inc VAT, inc fuel) up 4.0 per cent to £13,365 million (2011/12: £12,848 million)

· Total sales (inc VAT, ex fuel) up 4.1 per cent

· Like-for-like sales (inc VAT, ex fuel) up 1.7 per cent

· Underlying profit before tax(1) up 5.4 per cent to £373 million (2011/12: £354 million)

· Underlying basic earnings per share(2) up 9.4 per cent to 15.2 pence (2011/12: 13.9 pence)

· Return on capital employed(3) of 10.9 per cent (2011/12: 10.9 per cent)

· Interim dividend of 4.8 pence per share, up 6.7 per cent (2011/12: 4.5 pence per share)

Statutory

· Revenue (ex VAT, inc fuel) up 4.0 per cent to £12,160 million (2011/12: £11,693 million)

· Profit before tax up 2.5 per cent to £405 million (2011/12: £395 million)

· Basic earnings per share up 4.9 per cent to 17.0 pence (2011/12: 16.2 pence)

Operating highlights

· Outperformed the market, increasing market share to 16.7 per cent(4), the highest for nearly a decade, completing 31 consecutive quarters of like-for-like sales growth

· Nearly 250 million Brand Match coupons printed since its launch a year ago, with 'Cheaper Here Today' coupons issued over 50 per cent of the time

· Celebrated ten year partnership with Nectar, a continuing source of customer insight and loyalty

· Operational cost savings of around £60 million, on track for around £100 million for the full-year

· Underlying operating margin unchanged (up 1 basis point at constant fuel prices)

· Five awards at the Retail Industry Awards 2012 including Supermarket of the Year for the fifth time in seven years and Convenience Chain of the Year for the third year in a row

· World sector leader for food retailers for the sixth consecutive year in the Dow Jones Sustainability Index

Strategy highlights

· Great food: Continued investment and growth in own-brand, with penetration increasing at a faster rate than any other major supermarket. We are 85 per cent of the way through the re-launch of our core by Sainsbury's range which will see 6,500 new or improved products introduced by April 2013

· Compelling general merchandise and clothing: Goes from strength to strength, currently growing three times faster than our food business and gaining market share

· Complementary channels and services: Online continues to perform strongly, growing at over 20 per cent, with grocery orders regularly exceeding 165,000 a week. Our convenience business is expanding by one to two stores each week and is enjoying almost 20 per cent year-on-year growth. Sainsbury's Bank continues to make strong progress, with our share of joint venture post-tax profit up from £7 million to £12 million

· Developing new business: Announced I2C, a joint venture company with Aimia, owners of Nectar. Launched our MP3 music download service; acquired a majority stake in Anobii e-book platform; announced a video on demand service powered by Rovi

· Growing space and creating property value: During the half-year we opened 351,000 sq ft of space, comprising five supermarkets, 49 convenience stores and three extensions. Property profits from sale and leaseback activity were £48 million

J Sainsbury has something to boast about
3:24 pm
Being the UK's third largest supermarket chain doesn’t make J Sainsbury (LON:SBRY) the third best. The group’s market share is near a decade high and like-for-like sales have seen 31 quarters of consecutive growth.

In the year to the end of September the market share of Sainsbury’s increased to 16.7% from a figure of 16.6% the year before. This might not sound like much but in the hyper-competitive UK supermarket space it provides something to boast about.

The group also saw like-for-like sales (excluding fuel) increase by 1.7% in the six months to September which compares to a 0.6% decline at market leader Tesco. This has served to bolster Sainsbury’s bottom line with a 4% H1 increase in operating profits.

Supermarket groups are at a crossroads with rapid space expansion being called into question. However, smaller convenience stores are seeing growth while financial services and non-food offer opportunities.

For investors Sainsbury’s offers a relatively defensive stock although its expansion into non-food is at risk of competitive attack from Internet only firms. Sainsbury’s also stands out for its strong balance sheet that is supported by £11.2bn of properties.

With a business that is focused on the UK only it is perhaps no surprise that Sainsbury’s has stole a march on some of its rivals. Like-for-like sales at the group were up a respectable 1.7% in H1 albeit with a 0.8% boost from store extensions.

With net new space of 2.4% the group saw total sales growth of 4.1% in the six months to the end of September. In the second half of the year the like-for-like sales are set to be in-line with last year while the contribution from new space is forecast at 2%.

Total gross space is set to increase 5% this financial year with Sainsbury’s opening 1-2 new convenience stores a week. In fact convenience stores are growing at almost 20% a year with 49 new stores in the first half.

A key area of this is clothing with Sainsbury’s partnering with the group’s Tu clothing range achieving its best every sales on Saturday 29th September. Other areas being developed are internet grocery shopping which is growing at 20% a year and Sainsbury’s Bank which saw JV profits up a third.

For investors any success in sales is only relevant if it translates into the bottom line. Sainsbury’s saw an in-line performance with revenue growth of 4% generating operating profit growth of 4% in the first half.

In terms of the balance sheet Sainsbury’s stands out for its robust property portfolio that was valued at £11.2bn. Net debt was £2.2bn as of the end of September while net interest cover was a sturdy 7.3X.

The stock trades on 11.3X forecast earnings for the year to March 13 which falls to 10.9X for the following year. Meanwhile the dividend yield for the current year is 4.9% which increases to 5.2% for next year

Oriel note today:
"Has the Olympic torch burnt out for Sainsbury’s? Sainsbury’s enjoyed a very strong 2012 as a whole and generally won market share. However we think that things have got much tougher here since the Interims, and we think that the decision to offer 10p a litre off petrol for £60 spenders from 27th December to 2nd January is a response to an uninspiring Christmas. Our own view is that prices have been rising here, and therefore a slowdown in overall LFL sales implies a decent (and a little worrying) deceleration in volumes. In Q2, LFL was 1.9%. This run-rate was expected to slow as the contribution from extensions diminishes in this quarter (from 0.8% to 0.2%), and the comparative is slightly tougher. Our initial ballpark Q3 LFL thinking was 1.0-1.5%. However having spoken to the company it’s clear that this is on the optimistic side. Non-food was showing around 4% LFL in Q2 but this has slowed. November didn’t look good from a food perspective from the Kantar data, and it seems as though December has continued the same trend.
The company reports on 10th January: we now expect LFL to be around 0.75%, which implies a volume slowdown from -1% to -3%. Management states that it did not repeat some of the margin sapping promotions from last year, so the bottom line picture will probably prove to be OK for now, but we think that it is highly significant that Sainsbury’s has introduced a petrol voucher when most shoppers are suffering from promotion-blindness. LFL will have to pick up in Q4, or FY PBT consensus of £742m (we’re on £745m) is in trouble. More at risk still would be the 7% PBT growth we expect for 2013/14, in the presence of sustained LFL volume declines. In the short term, the shares look vulnerable."

Sainsbury , Britain's No. 3 grocer, has guided to second-half like-for-like sales growth similar to the 1.7 percent in its first half. For its third-quarter update, expected Wednesday, analysts forecast like-for-like growth of about 0.9 percent.

Trading Statement

Good sales, outperforming in a tough market

· Total sales for third quarter up 3.9 per cent (3.3 per cent excluding fuel)

· Like-for-like sales for third quarter up 1.5 per cent (0.9 per cent excluding fuel)

· Record breaking Christmas, reflecting 32 consecutive quarters of like-for-like growth

· Multi-channel strategy continues to deliver strongly

Justin King, Chief Executive, said, "This Christmas we have helped more customers than ever to Live Well for Less, delivering another quarter of good sales in a challenging retail environment, increasing market share. Like-for-like sales excluding fuel were up 0.9 per cent, which was on top of a very strong Christmas last year, giving a two year like-for-like growth figure of 2.9 per cent.

Oversold?

Sainsbury and Tesco confirmed as top food retailers going into 2013
By Natasha Roberts

Tue 15 Jan 2013

Sainsbury (J) 321.90p -1.14%

LONDON (SHARECAST) - Sainsbury has been confirmed as the joint top performing food retailer going into 2013, alongside Tesco, following a report by market researcher Kantar Worldpanel.

According to data published Tuesday, both companies delivered a 3.9% cash sales growth rate in the six weeks to January 6th, with market share at the same levels seen a year ago.

For Tesco this compares with four-week growth of 4.2%, indicating that momentum slowed somewhat, while Sainsbury's four-week cash sales grew 3.7%, meaning Tesco is still the frontrunner.

Meanwhile, Morrison's Christmas like-for-like sales dropped 2.5% in the six weeks to December 30th, and cash sales declined 1.0% in the six weeks to January 6th.

The six-week figure for Asda came in at 2.1%, compared to 2.5% for the four-week figure.

Together, the four major grocers delivered growth of 2.7% in the six week period.

Kantar Worldpanel Director Edward Garner said: "This represents a clear improvement in Tesco's fortunes following a series of share dips in 2012, but it is also a strong performance from Sainsbury's which had been predicted to suffer disproportionately from the Tesco fight-back by some commentators."

The ONS food inflation rate was also released Tuesday, revealing that it remained at a relatively high level of 3.6% in December, compared to 3.7% the previous month.

Food inflation is expected by most companies to accelerate in the early stages of 2013.

Trading Statement

Fourth Quarter Trading Statement for 10 weeks to 16 March 2013

Strong sales, reflecting continued market outperformance

· Total sales for fourth quarter up 7.1 per cent (6.3 per cent excluding fuel)
· Like-for-like sales for fourth quarter up 4.2 per cent (3.6 per cent excluding fuel)
· Like-for-like sales for year up 2.1 per cent (1.8 per cent excluding fuel)
· Weekly customer transactions increased by over 800,000 year-on-year
· Achieved target of c.5% gross space growth for the year

Broker snap: UBS hikes forecasts for Sainsbury ahead of results
Thu 02 May 2013


Broker snap: UBS hikes forecasts for Sainsbury ahead of results LONDON (SHARECAST) - Another solid increase in profits is expected from Sainsbury when it reports its first-half report on May 8th, according to UBS which lifted its estimates for the supermarket giant on Thursday.

The broker, which kept a 'buy' rating for the stock, lifted its full-year profit before tax estimate by 5.2% to £749m, ahead of the consensus forecast for £746m.

"This represents a good outturn given industry demand conditions have remained depressed while key competitors have experienced profitability declines in the equivalent period," UBS said.

Furthermore, the broker said that guidance for the full-year ending March 2014 is likely to follow the same pattern as the year just gone. It expects mid-single-digit sales growth and ongoing tight cost control to result in another year of "decent progress in earnings".

"In our view Sainsbury’s returns metrics have remained impressively resilient (flat since FY10) given the abnormally weak industry backdrop (ie persistent volume declines) and a period of heavy capex/space expansion which naturally has a dilutive effect given property lag effects and store maturity profiles.

"Looking ahead we think it is plausible that Sainsbury’s returns will resume their upwards trajectory in FY14, providing tangible validation for the investment strategy."

The target price for the shares has been lifted from 400p to 425p.

The stock was up 0.52% at 384p by 10:59.