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

Week ahead: Sainsbury's back in the news with latest half year numbers
By Andrew Neil
November 09 2014, 7:00am


One of the UK's big supermarkets Sainsbury's (LON:SBRY) will be back in the news this week, when it reports its first half results on Wednesday.

It comes after the group launched last week a joint venture with a Danish partner to open Netto cost saving stores.

New chief executive Mike Coupe faces a baptism of fire as the supermarket has been forced to slash prices as a shift towards convenience shopping and fierce competition has hit sales.

US broker Jefferies says the firm remains the ‘most vulnerable of all UK grocers’ but expects first half profits to be helped by the supermarket’s bank and ‘contained’ gross margin investment.

The broker repeats a ‘hold’ recommendation and target price of 250p. Shares were trading at 245.5p on Friday.

Having sold its stake in stake in Verizon Wireless earlier this year, investors have been keeping an eye on Vodafone (LON: VOD), which reports interims on Monday.

The telecoms business has had to plough vast sums in organic investment and acquisition activity to resuscitate its lagging European operation.

This is facing convergence competition from major players and price competition from smaller ones.

Interims tomorrow, confortably in profit atm and some of the prospective drawbacks such as dividend may be cut by 1/3 have been aired, so that won't come as a surprise.
2517

Interim Results

Financial summary
· Underlying Group sales(1) (inc VAT) down 0.3 per cent to £13,916 million (2013/14: £13,953 million)
· Retail sales (inc VAT, ex fuel) flat year-on-year
· Like-for-like sales (inc VAT, ex fuel) down 2.1 per cent
· Underlying profit before tax(2) down 6.3 per cent to £375 million (2013/14: £400 million)
· Underlying basic earnings per share(3) down 12.7 per cent to 14.5 pence (2013/14: 16.6 pence)
· Return on capital employed(4) of 11.1 per cent (2013/14: 11.4 per cent)
· Return on capital employed excluding pension fund deficit of 10.3 per cent (2013/14: 10.5 per cent)

Statutory
· Group sales (ex VAT, inc fuel) down 0.1 per cent to £12,667 million (2013/14: £12,684 million)
· Items excluded from underlying results total a charge of £665 million (2013/14: £33 million profit), including an impairment and onerous contract charge of £628 million (2013/14: £92 million)
· Loss before tax of £290 million (2013/14: £433 million profit)
· Basic loss per share 18.0 pence (2013/14: 17.9 pence per share earnings)
· Interim dividend 5.0 pence per share (2013/14: 5.0 pence per share)

Highlights from our Strategic Review

Evolving to win
· The grocery sector is undergoing structural change as customers shop more frequently, using online, convenience and discount channels more. We expect supermarket like-for-like sales in the sector to be negative for the next few years, but we have robust plans to address this challenge
· In challenging market conditions, Sainsbury's has delivered relative outperformance in sales and profit for the past five years
· We have listened to our customers and are evolving our strategy from a position of strength to meet their changing needs. We will build on our strong values, differentiated offer of quality products and services, competitive value proposition, advantaged store portfolio, established convenience and online businesses, great colleague service and our unique understanding of our customers

Great products and services at fair prices
· We will improve the quality of 3,000 own-brand products, focusing on the categories which matter to our customers
· We will invest an additional £150 million in price, of which approximately half will fall in the second half of 2014/15 and the remainder in the first half of 2015/16, focused in areas where our customers tell us price matters most
· We will always be competitive on price versus our main supermarket peers. We will work in close partnership with suppliers to deliver value chain efficiencies which can be reinvested in price
· We will continue to grow our non-food business with a focus on design-led clothing, cookware, homeware and seasonal products - increasing our non-food space in supermarkets and rolling out clothing online in 2015
· We are on track to deliver sales and profit growth at Sainsbury's Bank and have opportunities to expand the Bank's product portfolio

There for our customers
· We will open 500,000 sq ft of space in each of the next two years, followed by 350,000 sq ft in 2017/18. This will include eight new supermarkets over that period. It also includes four replacement stores, three of which are mixed-use developments, unlocking significant property profits. Over half of our new space will be convenience stores as we continue to target opening 100 convenience stores per year
· A review of our supermarket estate has concluded that:
- Around 75 per cent of our stores are in the right locations and are of the right size for our food and non-food offer and we will pilot new formats focused on optimising range, layout and ease of shop to meet changing customer shopping patterns
- Over the next five years, around 25 per cent of our store portfolio will have some under-utilised space which can be used to expand our non-food offer or for other purposes such as carefully selected concession partnerships
· We will continue to invest in groceries online to further improve our website and the customer experience, trialling new ways for customers to order and acquire their groceries, including click and collect

Colleagues making the difference
· We will improve our customer experience through continued investment in colleague training and new user-friendly technologies, for example through the roll-out of 'CAM', an automated availability tracking tool which reduces cost and improves on-shelf availability throughout the day

We know our customers better than anyone else
· We will invest in the systems infrastructure to create a single view of our customers, helping us to become increasingly effective in our customer interactions

Our values make us different
· Our values remain a key component of our differentiated offer and we will continue to invest in areas that matter to our customers

Maintaining balance sheet strength
· We will deliver total operating cost savings of £500 million over the next three years. This represents annual operating cost savings in the range of £150 million to £175 million, a step up from recent levels.
· We will reduce capital expenditure to between £500 million and £550 million per annum over the next three years, approximately two per cent of sales
· We maintain our interim dividend at 5.0 pence per share for 2014/15 and will fix dividend cover at 2.0 times our underlying earnings for 2014/15 and over the next three years
· Given the price investment announced today, combined with the outperformance of both the Bank and cost savings in the first half that we do not expect to be repeated in the second half, Sainsbury's expects profitability to be lower in the second half than the first half

After a brief venture in the 220's SBRY has recovered somewhat, the uncut interim divi of 5p goes ex div next thursday, finished strongly at the end of trading today. Possible it will advance early next week as income seekers buy for the divi.
2517

With GS having a tp of 155p I decided to take an ok profit this morning having bought @ 151.5p. Too much downside risk for now.
2517

Sharecast -

The share price of UK supermarket chain J Sainsbury was under pressure on Thursday after Shore Capital downgraded its rating from 'hold' to 'sell', saying investors should expect a "material contraction in profitability".

The broker said it sees "few attractions in holding Sainsbury's shares". It expects a 30% "reset" in earnings per share and is forecasting three years of declines in Sainsbury's profits and dividends.

Long 227.5 tight stop

added 225 and 225.2, same stop

nice gap up and out of the hole so stop loss to stop profit just below the bottom of gap.

Tough times in UK grocery market to take another 18 months to two years before improving: Sainsbury's boss



http://www.dailymail.co.uk/money/news/article-2882529/Tough-times-UK-grocery-market-18-months-two-years-improving-says-Sainsbury-s-boss.html

stop to +9

Sharecast -Sainsbury's was besieged by short-sellers last year as hedge-funds bet the grocer would be hit by price cuts in the industry, the Sunday Telegraph said. Sainsbury's shares suffered the most sustained shorting activity of any company in the FTSE 350, according to research firm Markit. Sainsbury's shares on loan reached a record 18.4% at the end of October.

Sainsbury's is accused of delaying payment to contractors that built and refitted its stores, the Sunday Times alleged. The supermarket chain wrote to contractors through the law firm Dentons, increasing to 82 days from 30 days the time contractors must wait for payment.

Also in the Telegraph

stop profit to +14

Trading statement 07 Jan 15 Sainsbury (J) PLC [SBRY]

FTSE 100 movers: Energy stocks hit by drop in crude, Lloyds boosted by upgrade

Fri, 02 January 2015


Sainsbury was trading lower as hedge funds forecast that the supermarket group would be damaged by the grocery industry's escalating price war. Lansdowne Partners, Odey Asset Management and Marshall Wace all blamed the growing popularity of discounters Aldi and Lidl, who would hit profitability by forcing aggressive price cuts for the group to remain competitive.

stop out +14

long or short or secret?

Trading Statement

Third Quarter Trading Statement for the 14 weeks to 3 January 2015

Good sales performance in a tough market

· Total Retail sales for third quarter down 0.4 per cent (excl fuel), down 2.5 per cent (inc fuel)

· Like-for-like Retail sales for third quarter down 1.7 per cent (excl fuel), down 3.9 per cent (inc fuel)

· Over 29.5 million customer transactions in the seven days before Christmas

· Over 1,000 product prices reduced since we announced our £150 million price investment