Sainsbury (j) Share Discussion Threads

[netcurtains] 15/9/2020 14:40

cl0ck0rkOrange: If anything buying Argos turns us into an Amazon on the cheap.. If you think about it, Sainsburys is an Amazon up and running - its worth a trillion at least once we get that Nasdaq quote.

During lockdown Argos must of made a mint!

[essentialinvestor] 15/9/2020 14:40

login, agree with your sentiments.

We have seen this countless times, from Debenhams, to AA. To AML... etc.

There was a quality article from the FT on AML, published before flotation:

'Beware a private equity wolf in sheep's clothing'

I posted that on the AML board pre listing.

[loganair] 15/9/2020 13:39

Tempted by the Sainsbury’s share price? Let’s examine the facts:

Sainsbury’s share price – recovering or ailing?

Market sentiment has been against Sainsbury’s for some time now. Its share of the UK grocery market has declined from around 17% at peak to 14.9% currently, whilst the expensive failed merger with Asda dented confidence in the group management. Although the pandemic has led a surge in grocery demand, this has been through the less profitable channel of online sales. Analysts also expect around £500m of pandemic related costs, forcing a delay in store investment.

It is also interesting to note that Sainsbury’s depends heavily on non-food sales, driven mainly by its acquisition of Argos. This element of choice purchases by consumers leaves it more vulnerable to the economic downturn that we now find ourselves in.

The final dose of bad news for investors comes in the form of the ailing bank. After requiring significant capital injections over the last two years, the expectation is that a further £350m could be needed to cover bad debts and write-downs until 2023. The period of historically low interest rates also makes generating profit from banking difficult.

summary:

Given these significant headwinds, I can’t see any basis for investment, so I’m avoiding the Sainsbury’s share price for now. Indeed, it has declined further since the April examination.

However, if you do like the look of the supermarket sector in general, I see reasons to be optimistic in Morrisons latest trading statement.

The share price is nearly identical to Sainsbury’s, but Morrisons is yielding a superior dividend, and has lifted its interim payout by 5.7%. Although half year profits fell significantly, the rise in like-for-like sales excluding fuel sat nicely at 8.7%, leaving it well placed to focus on improving profitability. Similar to Sainsbury’s, a portion of this growth was through the online channel, but crucially Morrisons is starting from a smaller online and delivery presence than its rivals, and as such has more room to grow. The strengthening of its relationship with Amazon also gives more room for expansion in this area.

In announcing expectations of improved free cash flow, reduction in net debt and underlying pre-tax profit, I see a momentum in Morrisons that Sainsbury’s lacks, and as such the former’s shares are worth a very close look from potential investors in my opinion.

[loganair] 15/9/2020 13:30

A number of high-profile hedge funds are again ramping up bets against UK supermarket giant Sainsbury’s.

Third Point, along with AHL and GLG Partners, Man Group’s systematic and discretionary hedge fund units, have increased their short positions in the UK supermarket giant recently, according to regulatory disclosures made to the FCA since the start of September.

BlackRock Investment Management has also built a 2.65 per cent net short in the FTSE 100 company, while Citadel and Pelham Capital also maintain negative wagers against what is now regarded as the UK’s most shorted stock.

Sainsbury’s share price has fallen over the summer, from a June high of 209p to a low of 179.15p at the start of September, and has continued to trend downwards over the past fortnight, dipping 2 per cent at one point last week.

More recently, though, Sainsbury’s has reportedly lagged the performance of competitors such as Tesco, Lidl and Aldi, and CEO Simon Roberts has warned of “materially increased costs” for the company.

In a July statement, Roberts said: “The coming weeks and months will continue to be challenging for our customers and our colleagues and we do not expect the current strong sales growth to continue.”

[dexdringle] 15/9/2020 13:26

They can only make themselves rich if people are stupid enough to lend them money and / or buy the shares when floated.

I think those days are over. Things like Aston Martin were literally taking the pi$$. £19 a share float down to 30p.

Everyone is wise to this now unless fund managers support them with other peoples money.

[tim 3] 15/9/2020 13:15

With you on private equity takeovers.

Nothing short of criminal with only one objective making themselves rich.

Same happened with Comet takeover

[loganair] 15/9/2020 09:11

Given the choice I much prefer to have less of good quality rather than more or poor quality.

Sadly so very few people seem to know the difference between good value and cheap.


This is where the likes of Sainbury's are making a mistake, they either go for the customer who wants less of good quality or the customer who wants more of poor quality. It seems to me that the likes of Sainsburys are trying to go for both sets of customers which is not working for them as it doesn't work for any company to try and do so.

[loganair] 15/9/2020 09:06

On-line home delivery for the supermarkets - what a waste for the supermarkets.


My local Tesco has 8 delivery vans, 6 drivers and up to 10 people collecting stuff from the shelves for home delivery that other members of staff have just put out on the shelves.


I've calculated that this is costing my local Tesco anywhere upto £300k per year while they charge customers only c£100k per year for the on-line-home delivery service.

It beats me as to why any supermarket offers on-line ordering, home delivery as it is hugely loss making for the supermarkets. Only Ocado makes a profit because the have been specifically set uo and run for on-line, home delivery.

Similarly how the legacy supermarkets can not compete with Aldi or Lidl or the legacy airlines compete with the low cost discount carriers as both these have been specifically set up and run to be low cost, low quality, low customer experience companies.

[netcurtains] 15/9/2020 08:46

loganair: I know - I vaguely think it happened to Man United too - piled up with US debt so could not compete so well with Man City and Liverpool.

[loganair] 15/9/2020 08:41

net - This is exactly what happened with Woolworths, Debenhams & Toy-R-Us, plus many, many more.


When it comes to the book value worth of a company I would like to see Goodwill, fixtures and fittings and the brand name striped out as are not worth anywhere near the amount that the company puts down they are worth.

Woolworths put down in their book value £110mln for goodwill, fixtures and fittings and brand name. When they went bust, goodwill was written down to Zero, was worthless, fixtures and fitting sold for just £15,000 and the name Woolworths was sold for £1mln.

How many times when a company is taken over, as the years pass the goodwill paid is continually written down as it is found not to be worth as much as was paid for by the company doing the take over.

[buywell3] 15/9/2020 08:26

====== The olde model is DEAD ======


Covid-19 has killed it

order on-line

free same delivery or delivery to suit the customer is now where it is at

Listen to the customer --- give the customer what they want --- the customer is KING

WHO does that ?

[netcurtains] 15/9/2020 08:24

Surely the police should arrest the criminals involved?

[loganair] 15/9/2020 08:20

Which ever of the two private equity firms takes a majority stake in Asda, this is how I see it going:

1. Asda is striped of all its assets.

2. Then load up with debt.

3. Will pay themselves a huge dividend.

4. Manipulate the figures to make it look as though Asda is a highly profitable supermarket paying a high dividend.

5. Sell Asda to the private retail investor on the stock market, making even more money for themselves and Walmart.

6. Asda will then suddenly be found to be a low margin, low profit supermarket and the shares will become worth less then when they were IPO'd, with falling dividends and sadly as per usual the small private retail investor will lose out.

7. In the end, Asda maybe loaded up with so much debt, that their profit doesn't even cover the interest on their debt and they finally go bust, restructure, debt for equity leaving the private retail investor with nothing left of their investment in Asda.


Have I missed anything out???

[muffinhead] 14/9/2020 13:02

Apollo £3.75b debt.... Lone Star £?.??b debt

I bet the "operating company" gets all the debt/leases and the "property company" gets the rental stream from the operating company and property re-development rental/sales revenue upside.

Poor old ASDA may be getting a private equity makeover.

[loganair] 14/9/2020 12:40

A multi-billion swoop for Asda could deepen a price war between Britain's supermarkets this Christmas, sources have revealed.

The frontrunners to take control of Asda are buyout giants Lone Star and Apollo Global Management, which have both submitted bids thought to be around £6.5billion to buy a majority stake in the supermarket chain from its US owner Walmart.

Lone Star's management, who are being advised by Asda's former chief executive Paul Mason, believe Asda is the most resilient of the UK's Big Four supermarkets as customers seek out cheaper deals.

It sees an opportunity to work alongside Walmart – which will retain a minority stake – to review pricing across Asda's ranges to make it even more competitive against discounters Aldi and Lidl.

Grocers including Morrisons and Tesco are sharpening prices ahead of what is expected to be a major price-cutting campaign this Christmas.

Lone Star would also invest in Asda's own-label range – and its George fashion and homeware label. The source added: 'Lone Star don't see Asda as a big turnaround job. They want to support and accelerate the management team's strategy to maintain price competitiveness.'

Lone Star has a vast property arm including the Quintain UK residential property firm, which owns Britain's biggest build-to-let development at Wembley Park. It is understood Lone Star could look at turning Asda's freehold sites into mixed-use developments with housing.

Apollo is lining up £3.75billion of debt to fund its proposed deal secured against Asda's 300 stores and its distribution centres.

Apollo would split Asda into an operating company and a property company and float Asda within three to five years.

A deal could be announced by the end of the month.

[netcurtains] 11/9/2020 16:03

I bought a few more on the bell of 4:30pm.
I often feel shares fall on Friday afternoon and rise on Monday. But probably be proved wrong - anyway took the punt...And investors chronicle have a history of writing after the horse has already bolted.

[loganair] 11/9/2020 10:41

J Sainsbury:

(Investors Chronicle - sell) The supermarket group had steadied the ship after the pricey failed merger with Asda, but the pandemic has brought new problems, notably a squeeze on margins amid a shift towards less profitable online sales and large potential losses at its bank. The balance sheet remains “stretchedR21;. The shares are inexpensive, but the growing army of short-sellers is right to sense “a value trap”.

[dexdringle] 10/9/2020 10:08

No. Only £5tn is (net of mortgage) housing. £9tn is a combination of pensions, cash savings, investments, gold, Ferraris, oil paintings etc

So, as a country, even ignoring the housing, we have £9tn of liquid(ish) unencumbered personal assets and a National Debt of £2tn. The National Debt could be repaid using less than a quarter of this.

Now, obviously, were this to happen it would also need to be accompanied by a complete change of the political system, and a cast iron guarantee that no debt will ever be allowed to accrue again. A bit like taking a credit card off a wayward teenager and clearing the balance.

Alternatively we drown future generations with todays debt. I don't even have kids and never will, so by rights I really shouldn't give a toss, but even I think that is unacceptable.

[netcurtains] 10/9/2020 08:54

dexdringle: Not so - nations wealth is housing. To clear the debt we would have to sell the entire housing stock overseas otherwise we would just be passing the nations debt around amongst ourselves like pass the parcel. Our wealth is like the 2008 financial crash - its based on assumption that housing stock is worth loads of money to overseas buyers.

the debt in reality has been passed to the FUTURE because we'd drown our own kids to save ourselves.

[dexdringle] 10/9/2020 08:49

Regarding National Debt of £2 trillion. This is our debt. All of us. Whether we like it or not. The government has kindly accrued it on our behalf.

The good news is that private wealth, NET OF PERSONAL DEBT, is £14 trillion (roughly £6tn pensions, £5tn [net of mortgages] property equity, £2tn savings and investments, £1tn other assets). So if we each calculate our own personal net wealth (including pensions) and pay 15$ of that across to government, the national debt will be clear.

My net wealth is £500k. So I have to pay £75k to clear my part. Painful but job done.