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

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.
2517

Worth a watch next week!

01 Oct 2014 Second Quarter Trading Statement 2014-15

Took the plunge they go ex div (5p) in November, asset backed and Qatar interest thought this a good entry point 251.5p.
2517

Good luck with that George and presumably there should be a trading bounce at some point, but brokers all seem pretty negative on the stock, though TP's seem to be a little above your entry point.

Merrill Lynch: "Sainsbury’s deteriorating sales performance in recent weeks, as implied by Kantar data, has proven that it is certainly not immune from the structural headwinds occurring in the industry. We see risk to FY15 and FY16 consensus and dividend as we foresee the threat of industry price cuts and deleverage impacting earnings and subsequentlyFCF. As such, the balance sheet remains a concern. Retain U/P.
Unfortunately, the threat of deflation, a lack of volume growth, and stubbornly high level of space growth means that even if Sainsbury’s manages to maintain its market position, it will likely continue to experience negative LFL into next year. Management has guided for FY15 LFL to be similar to the prior year, i.e. +0.2%; however, given its H1 performance (BofAML -2.2%), we would expect this to be revised down at its 2Q IMS next Thursday (Oct 1). We estimate 2Q LFL of -3.1% (implied by Kantar), FY15 LFL at -1.5% (consensus -0.5%) and FY16 LFL of -1.6%.
We lower our FY15 PBT estimate by 2% to £701m on account of our lower sales assumptions, placing us 5% below (company compiled) consensus. Our concern, however, is greater for FY16, when we expect Tesco to act to drive a turnaround in its sales performance. We think this will involve some degree of price investment, following actions by Morrison and Asda and thereby fuelling more industry deflation. We cut our FY16E PBT by 5%, which is 20% below (Bloomberg) consensus.
It is difficult to assess at what point Sainsbury’s would need to raise cash given the lack of disclosure over its banking covenants, and no bonds outstanding. However, on our earnings estimates, we foresee lease adjusted net debt/EBITDAR reaching 4x by FY17E (from 3.3x in FY14), a level that we think would likely be considered unacceptable by management, forcing them to act. A cut to capex and/or dividend is likely, in our view, and we do not rule out a capital increase."

Deutsche summary: "We lower our price target by 17%, in line with our EPS cut, from 330p to 275p. The deterioration in relative sales performance at Sainsbury’s in August and September (Kantar) suggests that the company’s competitive position has been eroded. We believe it needs to invest in its offer in order to recover sales momentum and expect consensus earnings for Sainsbury’s to fall toward our new lower forecasts (17% below consensus on 15/16 EPS) over the next 6 months. Given the lower profitability, we expect dividends to be cut to protect the balance sheet. We cut our DPS estimate by 50% from 17.3p to 8.65p, representing a 3.1% dividend yield on our 275p PT. We rate SBRY Hold.

Thanks for that H, it does make for depressing reading and SBRY are a gnat's whisker off their 5 year low, how much bad news is in the price I don't know, but experience tells me that decent co's recover and SBRY imo fall into that catagory. Market share is being taken it's true, divi may be cut next year, and margins will fall, what better time to invest. I've allotted about 60% into these, so I have scope if necessary.
2517

Just a little bit more if you are interested:
Santander: "We are now forecasting Sainsbury’s dividend to be cut 28% in 2015/16 to restore cover to 2x. Tesco announced a 75% reduction last month, and we forecast Morrison to halve its FY dividend. Following this week’s Kantar data, we have lowered our EPS forecasts by 12% and 20% for 2014/15 and 2015/16, respectively, and see continuing pressure on consensus (we are 10% below Bloomberg 2015/16 EPS consensus). With very poor visibility and the prospect of a deteriorating market, as well as questions over property valuations given structurally weaker margins, we lower our recommendation to Underweight and cut our DCF/peer comp-derived target price to 250p."

Barclays: "Sainsbury has been our preferred name in the UK for some time, a choice driven primarily by its consistent market share gains. However, recent trends have been much less convincing and we expect a weak 2Q LFL number next week (-3.4%). Possibly the company’s FY guidance might be revisited. We cut our sales and margin estimates to reflect the tougher environment and Sainsbury’s weaker share trends. But even with quite significant cuts, the stock is trading at a clear discount to peers despite (still) better sales trends. If sales trends deteriorated further then we would lose our appetite for the stock, but the sharp recent fall (-16% in the last month) seems to fully incorporate next week’s difficult trading statement. We reiterate our Overweight rating but cut the target price to 300p."