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

Trading Statement

Fourth Quarter Trading Statement for 10 weeks to 15 March 2014

Declining sales in a tough market, continued outperformance of peers

· Total sales for fourth quarter down 1.5 per cent (down 1.0 per cent ex fuel)
· Like-for-like sales for fourth quarter down 3.8 per cent (down 3.1 per cent ex fuel)

Justin King, Chief Executive, said, "We have seen a decline in sales in the quarter reflecting tough comparatives. This time last year our sales benefited significantly from the discovery of horsemeat in some branded and competitors' products. We are pleased, however, that market data shows we have maintained market share at 17%1.

The market is now growing at its slowest rate since 2005, with falling food inflation in particular benefiting customers. The later timing of Easter and Mother's Day, which fall in quarter one of our new financial year, and unseasonable weather have also contributed to lower market growth year-on-year.

We continue to see growth in our own-brand ranges, significantly ahead of branded products, with penetration now at 51 per cent, versus 47 per cent for the market2. Our own-brand products are, on average, 20 per cent cheaper than a branded equivalent and are also supported by the values that our customers expect of us. We recently lowered the price of our milk, bread and eggs, but continue to pay a fair price to farmers through our Dairy Development Group, and only use British flour in our in-store bakeries and eggs from hens that are free to roam. Customers continue to tell us they recognise the uniqueness and value for money of our own-brand ranges.

Our general merchandise and clothing business continues to perform well, with particularly strong growth in menswear of over 23 per cent year-on-year. During the quarter we announced the renewal of our collaboration with the designer Gok Wan for a further 12 collections, and also released our eleventh collection of his ladieswear. Following successful trials, we have introduced our new general merchandise and clothing format into 53 stores, with a further 26 planned for the first quarter of the next financial year.

During the quarter we announced the completion of the acquisition of Lloyds Banking Group's share of Sainsbury's Bank, and are on track to complete the transition process as planned. We expect the Bank to become an increasingly important part of the value that customers receive from Sainsbury's, and another driver of customer loyalty.

Growth in our convenience business remains strong at over 15 per cent, and for the first time, during the quarter we saw one million transactions in a day. As well as opening around two new stores per week, we are part way through a programme to refit produce equipment in existing stores, responding to customer demand for more fresh food. Our groceries online business is growing at six per cent year-on-year, reflecting a reduction in marketing while the new customer website is launched. This roll-out is now 80 per cent complete and is due to finish in April.

Store operational standards and in-store execution remain high, as demonstrated by 21 wins over the financial year in the Grocer 33 award, with record high levels of availability.

We have opened approximately one million square feet of new space over the year, in line with our plans, including 22 convenience stores during the quarter. This brings a total for the year of 13 new supermarkets, 91 convenience stores and six extensions. We have also refurbished a further 54 stores.
Although some economic indicators are showing an improvement in the health of the economy, we expect the outlook for customers to continue to be challenging for the coming year. We remain confident that our differentiated offer, supported by 'value for values', Nectar data and Brand Match, will allow us to outperform our peers in the year ahead."

Found this comment over at Charles Stanley in one of their recent morning notes:

Sainsbury (SBRY: 314p) was the latest UK food retailer to come out with some pretty
shocking figures although its first quarterly decline in profits in nine years was not quite the surprise that the newspapers suggested. In fact, such has been the carnage in the sector that investors were patently relieved that the numbers were not even worse and the shares ended a choppy session with a gain of a couple of pence. The chart shows that they have spent the last few days hovering around the 300p level (having gapped dramatically lower last week) although it is still too early to suggest that a lasting bottom is in place. The salient point here is that a clearly-defined downtrend has developed over the last few months and while there is scope for further near-term upside (possibly to 330p) the overall technical picture is saying that it is still right to sell into strength.

Sharecast - Sainsbury’s is best placed to weather the supermarket price war but shareholder returns may be small, Danny Fortson wrote in the Sunday Times. In his Inside the City column, Fortson argued that Sainsbury’s was positioned to cope with the squeeze on the big grocers by German value chains Aldi and Lidl on one side and Waitrose at the posher end of the market. Bernstein analysts say Sainsbury’s has the longest established and best executed strategy. Tesco and Morrisons look “pretty desperate” Fortson said. "Some wars, of course, simply aren’t worth fighting,” Fortson concluded.

Sainsbury's faces £100m profit blow in price war as opening salvo is fired against discount Germans

By Neil Craven, Financial Mail On Sunday

Published: 22:19, 3 May 2014 | Updated: 22:19, 3 May 2014


Sainsbury's will plunge into the supermarket price war this week when it unveils annual results amid City fears that discounting will wipe billions of pounds off retailers’ profits in the coming year.


The ‘Big Four’ supermarkets – Sainsbury’s, Tesco, Asda and Morrisons – have all been affected by the exodus to German discounters Aldi and Lidl.


Sainsbury’s is expected to be hit by a wave of profit downgrades from City brokers this week following the opening salvo of cuts announced just days ago by Morrisons.





Discounting: Sainsbury's is expected to be hit by a wave of profit downgrades from City brokers


Discounting: Sainsbury's is expected to be hit by a wave of profit downgrades from City brokers



While the discounting is good for consumers as prices plummet, it is set to have a devastating effect on profits. Some analysts believe Sainsbury’s is preparing to launch price cuts and promotions worth up to £200million to defend itself.

Aldi and Lidl have grown rapidly over the past two years, capitalising on disillusionment among shoppers with the major supermarkets. Many sources estimate that the Germans are at least 15 per cent cheaper.



Two months ago Sainsbury’s chief Justin King, who leaves this summer, dismissed cuts at rivals as part of a ‘phoney’ price war.


But last week’s announcement by Morrisons that it would cut the price of 1,200 of its most popular items by an average of 17 per cent was widely seen by the City as a clear sign of structural change.


Reductions at Morrisons included slashing the price of Jammie Dodgers from £1.09 to 49p, eight cans of diet coke from £4.39 to £2.64 and Napolina chopped tomatoes from £1.25 to 79p.


Morrisons chief executive Dalton Philips has compared the impact of Aldi and Lidl to the shockwaves that were sent through the airline sector by low-cost carriers such as easyJet and Ryanair.


Retail analyst Clive Black at stockbroker Shore Capital described the cuts as a ‘contagion’ and he predicted further downgrades across the sector.


Sainsbury’s is expected to report a slight increase in profit this week of about 4 per cent to £786million. But some analysts fear the chain’s profits could drop by up to £100million over the next 12 months.


Price cuts could also be funded by reduced spending on new stores. Some analysts forecast that Tesco’s profit could drop to as little as £2.5billion in the same period from a high two years ago of £3.9billion.

Final results

Financial summary (1)
· Underlying Group sales (inc VAT) up 2.8 per cent to £26,353 million (2012/13: £25,632 million)(2)
· Retail sales (inc VAT, ex fuel) up 2.7 per cent
· Like-for-like sales (inc VAT, ex fuel) up 0.2 per cent
· Underlying profit before tax up 5.3 per cent to £798 million (2012/13: £758 million)(3)
· Underlying basic earnings per share up 6.5 per cent to 32.8 pence (2012/13: 30.8 pence)(4)
· Return on capital employed up 19 bps to 11.3 per cent (2012/13: 11.1 per cent)(5)
· Return on capital employed excluding pension fund deficit of 10.4 per cent (2012/13: 10.4 per cent)(5)
· Proposed full year dividend of 17.3 pence, up 3.6 per cent, cover 1.90 times (2012/13: 16.7 pence, cover 1.84 times)

Statutory
· Group sales (ex VAT, inc fuel) up 2.8 per cent to £23,949 million (2012/13: £23,303 million)
· Profit before tax up 16.3 per cent to £898 million (2012/13: £772 million)
· Items excluded from underlying results contributed £100 million of profit (2012/13: £14 million profit)
· Basic earnings per share up 17.8 per cent to 37.7 pence (2012/13: 32.0 pence)

Operating performance
· Market share maintained in tough retail environment; still at highest for a decade at 16.8 per cent(6)
· Operational cost savings of around £120 million
· Capital expenditure reduced to £888 million (3.4 per cent of sales) and year end net debt £2.4 billion
· Underlying operating margin improved by 8 bps (up 7 bps at constant fuel prices)
· Acquisition of Sainsbury's Bank completed as planned on 31 January 2014; transition remains on track
· Defined benefit pension fund triennial valuation complete resulting in funding deficit of £592 million, a
£635 million improvement on the 2009 valuation. Recovery plan agreed in 2009 remains unchanged
· Awarded:
o FTSE100 Business of the Year 2013 - QBE National Business Awards
o Supermarket of the Year - Retail Industry Awards (sixth time in eight years)
o Online Retailer of the Year - Grocer Gold awards (second consecutive year)
o Convenience Retailer of the Year - Retail Industry Awards (fourth consecutive year)
o Gold Accreditation - Investors In People (only supermarket to achieve this)

Sharecast - City fund managers are betting on share falls for some of Britain’s top retailers including Sainsbury's, the Mail on Sunday reported. Odey Asset Management, Artemis Investment Management and Eton Park International are among funds that have gambled more than £1bn on shares in Sainsbury’s, WH Smith and Burberry falling. The retailers are in the top 15 companies short sold by investors as investors focus on companies with imminent or recent management changes.

Sainsbury’s is expected to report a rare fall in sales when it posts a trading statement on June 12th, according to the Sunday Times. Analysts expect sales at stores open at least a year to have fallen by between 1% and 1.5% in the first quarter of the supermarket group’s financial year, the second three-month period in which sales fell after nine years of gains. However, Sainsbury’s is faring better than its rivals among the big four UK supermarkets.

Wednesday's agenda: Sainsbury's outlook to be closely scrutinised
By Giles Gwinnett
June 10 2014, 6:08pm
Wednesday's agenda: Sainsbury's outlook to be closely scrutinised


Another day and another glimpse into the beleaguered world of Britain's supermarkets - as Sainsbury's (LON:SBRY) posts a trading update.

It will cover group trading for the first quarter of its financial year - since March - and comes after full year results in May, which showed flat sales and modest profit growth.

"The share price retreated by 3% on the statement and has remained at similar levels since," notes broker Charles Stanley, who added that the supermarket's shares are no higher than they were five years ago.

"Market expectations are for dividend growth of 2% this year, predicated on subdued sales growth, a slightly lower profit margin and a broadly flat interest charge."

It says attention will focus on like-for-like sales performance and outlook comments.

The firm has high hopes for its convenience stores, of which it now has more than 600 (that's more than its larger stores) and it is opening two new ones each week.

The statement will show whether the expected growth from these businesses, is actually coming through, says the broker.

Sainsbury's casts a clothing net: Retailer set to take Next and ASOS with stand-alone fashion website

By Daily Mail Reporter

Published: 22:30, 9 June 2014 | Updated: 22:30, 9 June 2014


Popular: Over 7.5million customers bought Tu items last year


Sainsbury's is set to take on Next and ASOS by launching a stand-alone clothing website to showcase its TU brand.


The pilot site, which will begin in August in the Midlands, will offer home delivery and click & collect and is the first major initiative of Mike Coupe, who is taking over from Justin King as chief executive in July.


Sainsbury’s (up 2.5p at 328.6p) is expected to join rival Tesco in posting a disappointing first quarter sales update on Wednesday.


The pilot which could be rolled out around the country next year, if successful, is being supplied by the firm’s distribution centre in Bedford.


Sainsbury’s online director Robbie Feather, said: ‘Our customers want to shop with us through a range of channels that allow them to shop whenever and wherever they want and they’ve been asking us to extend our online service to our clothing.’





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The move is a strong signal that Sainsbury’s is putting more focus onto growing non-food ranges in a similar fashion to rival Asda, which sells the George brand.


Sainsbury’s began selling clothes in 1994. Last year more than 7.5million customers bought Tu items with sales of about £750million.

Trading Statement

First Quarter Trading Statement for 12 weeks to 7 June 2014

Continued growth in a challenging market

· Total Retail sales for first quarter up 1.0 per cent (ex fuel), down 0.3 per cent (inc fuel)
· Like-for-like Retail sales for first quarter down 1.1 per cent (ex fuel), down 2.4 per cent (inc fuel)
· Winner of Grocer 33 Customer Service and Availability Awards for the second consecutive year

I just read sainsbury's taking on asos and next...pretty good laugh.

311.4 long

already out. not working my way.

from a fashion point of view, Next is in a totally different league from ASOS ...... M&S fancy themselves taking on Next in that respect and fail dismally

Qataris could make renewed bid for Sainsbury's

Thu, 24 July 2014


Sainsbury's is expected to soon be approached with a bid from Qatari investors as the UK's biggest supermarkets comes under pressure from rivals, market sources told Sharecast/Digital Look on Thursday.

An announcement on the bid, which is understood to be about £5 a share, could come as soon as Friday, a person familiar with the situation said.

The Qatar Investment Authority in November 2007 walked away from its £10.6bn or 600p a share bid, saying credit markets had made raising funds too expensive.

Renewed speculation of an offer from Qataris came in March 2014 following a drop in the company's market share and stocks, due to competition from foreign discounters including Aldi and Lidl.

At the time Clive Black, head of research at Shore Capital, said in a note to clients that there is "more merit now than has been the case for some years for Sainsbury's largest investor to dust off 'the file' and consider a much more strategic investment, not least of which is an attractive annual cash return of an asset backed retailer".

In June Sainsbury's reported a 1.1% drop in first quarter like-for-like retail sales as the group gave a cautious outlook for consumer trends in the UK. Chief Executive Justin King blamed the fall on lower food price inflation and reduced fuel prices.

The UK's largest supermarkets, which also include Tesco and Morrisons, have been heavily slashing prices to regain market share from smaller discounters.

Sainsbury's declined to comment on the latest reports.

all that quatar bid chasers got washing pretty big time today

The Telegraph -


Short-sellers target Sainsbury's on Tesco fears


The new boss of Tesco is expected to reset margins, which is likely to his rival Sainsbury's

An employee works on a checkout at a Sainsbury's supermarket in Brentwood, Essex, UK

Sainsbury's share price has fallen, while the short interest in the stock has risen since the new boss of Tesco was unveiled Photo: Bloomberg News

By Ben Martin

5:54PM BST 09 Aug 2014



Short-sellers are targeting J Sainsbury amid fears that Tesco’s new chief executive will shake up the supermarket sector by resetting margins.


Since Dave Lewis was unveiled as the new boss of Tesco, the proportion of Sainsbury’s shares out on loan – a proxy for shorting – has risen and is approaching levels not seen since July 2006, when financial data group Markit began compiling its data.


Some 10.5pc of Sainsbury’s shares have been borrowed, up from 9.3pc on July 21, the day Tesco announced that Philip Clarke was being replaced by Mr Lewis as chief executive of Britain’s biggest retailer. Sainsbury’s is the single most shorted stock in the FTSE 100.


“The fear is that incoming CEOs of food retailers often reset margins and clearly there is a knock-on effect for everyone in the market,” said Exane BNP Paribas analyst Andrew Gwynn.


“The reason why people jump on Sainsbury’s is that its balance sheet and operational free cashflow used to be the weakest.”



A host of hedge funds are betting against Sainsbury’s, including Lansdowne Partners, Marshall Wace and Odey Asset Management.

Short-sellers profit from falling share prices by borrowing stock and then selling it, in the hope that they will be able to buy it back at a lower price and pocket the difference.

Sainsbury’s shares have fallen 6.9pc since Tesco unexpectedly unveiled its new boss, while Morrisons is down 4.7pc. The proportion of Morrisons shares on loan has edged up to 7.6pc from 7.2pc during the same period.

While shares in Tesco, which sounded a profit warning at the same time as naming its new boss, have dropped 13.3pc and hit a 10-year low, the percentage of shares that have been borrowed has also dipped to 2.2pc from 2.6pc.

Tuesday tips round-up: Sainsburys, Berkeley Group

Tue, 02 September 2014


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Sainsbury (J) Quote more






Price: 294.70

Chg: 5.20

Chg %: 1.80%

Date: 16:40



FTSE 100 Quote


Price: 6,824.18 Chg: 3.86 Chg %: 0.06% Date: 16:48

Sainsbury's full-year dividend pay-out of 17.3p per share is covered almost twice by its earnings. Indeed, the group's chief financial officer thinks the balance sheet is strong, but The Daily Telegraph's Questor team has its concerns. After all, last year's dividend of £320m in cash was part financed by a £222m rise in the company's net debt position. Current market consensus is for a profit margin of 3% in the year ending in March 2016 but a reduction to 1.5% is possible. Hence, a sustainable dividend would be something closer to 8p.

Even if the dividend does not drop that much the direction of travel is still starkly clear. So even though the stock is trading on approximately 10 times forecast earnings - and offering a prospective dividend yield of 5.4% - it still looks like a 'value trap'. "There is little concrete guidance on where the profit and dividend could fall to under new management and until then Questor would rather hold cash." Sell, Questor says.

In the final results (May) the property portfolio was valued at £12b, set against a market value today of around £5.5b, it would appear that SBRY is undervalued.
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