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getting ripped off |
A few 4,000 plus shares I'm here today. Scattered. |
As I've mentioned before, it seems to me reasonable to say what the CMA need to do is to shrink the size of Tesco by around 5% of UK Grocery market share to bring them down to circa 23.5%.
This could easily be done by rapping up the One Stop Shop brand with around 100 to 150 of the normal sized Tesco supermarket, then to IPO these on the stock market as a single entity with the proceeds of the IPO being returned to the current Tesco share holders. |
 Because as crowded as those superstore car parks are, as solid as the supermarkets seem (we all need food, don’t we?), the sector is undergoing one of those periodic shifts that could see some long-established UK players disappearing completely and a few emerging stronger than ever. The tectonic plates are colliding and there will be winners and losers.
In the former category are likely to come Tesco and Sainsbury’s. The latter will be composed of Asda, unless Leighton can work his magic and fast, along with Morrison’s and Iceland. Somewhere in-between, continually consolidating, are the German discounters, Aldi and Lidl. That’s the shape of the probable shakedown.
It was evident in the vital recent season. Top of the pile of the big food retailers was Tesco with 5 per cent growth, and Sainsbury’s on 3.5 per cent. In the no-growth, flat to negative, category were Iceland, 0.9 per cent higher - although that may have seen it benefit from a technical glitch that hit Morrison’s, down 1.9 per cent. The weakest link across a market that performed strongly, despite economic headwinds, was Asda. The chain, owned by TDR private equity and the brothers, Mohsin and Zuber Issa since 2021, suffered its worst festive trading for seven years, as sales crashed by 5.8 per cent, further eroding the third-largest player’s market share. There were other victors, notably M&S and Lidl.
The danger for Asda, Morrison’s and Iceland is that they find themselves vulnerable, the slow coaches of the herd, armed mostly with price to defend themselves, preyed upon by Tesco, Sainsbury’s Aldi and Lidl.
One time-honoured solution would be to merge, to create a chain substantial enough to compete more equally. Ironically, given the purpose, any proposal would almost certainly be rejected by the authorities or be allowed to proceed but with too-onerous conditions attached, on competition grounds. |
Asda Faces Challenges as Christmas Sales Drop: Could a Merger with Sainsbury’s Be the Solution?
Asda, one of the UK’s largest supermarket chains, has endured a challenging year, marked by disappointing Christmas sales and a pressing need to cut costs. In a difficult retail climate, the supermarket giant has already begun laying off staff and implementing cost-cutting measures in a bid to stabilise its financial position. However, whispers of a potential merger with Sainsbury’s have resurfaced, offering a glimmer of hope for Asda’s long-term prospects.
The idea of a merger between Asda and Sainsbury’s is not new. A proposed merger in 2019 was blocked by the Competition and Markets Authority (CMA), citing concerns over reduced competition and potential price increases for consumers. However, given the evolving landscape of the retail industry, the rationale for revisiting such a merger has gained traction.
A union with Sainsbury’s could offer Asda significant advantages, including greater economies of scale, an expanded footprint, and the ability to better compete with dominant players like Tesco and the fast-growing discounters. Additionally, the merger could unlock synergies in supply chain management, logistics, and technology, providing a much-needed boost to profitability.
Asda’s immediate priority must be to regain consumer trust and loyalty through improved value offerings and a stronger focus on customer experience. However, strategic moves like exploring partnerships or revisiting the possibility of a merger with Sainsbury’s could provide the long-term stability and competitiveness the brand needs.
With the retail sector facing unprecedented change, the road ahead for Asda is far from easy. Whether through internal reforms or external alliances, the supermarket giant must act decisively to secure its place in a rapidly evolving market.
Personal note - If a merger does remerge it seems to me reasonable to say would have a better chance then last time of passing the CMA as a combined Sainsbury's/Asda currently has exactly the same market share as Tesco's compared to 5 years ago when combined had 3.7% higher market share then Tesco's had at the time.
On the other hand, would Sainsbury's wish to take on the massive debt Asda now has?
It seems to me reasonable to say at this current moment in time Asda is worth not much more then its current debt. |
Last week the market wiped out £1.5 billion of the valuations for Tesco and J Sainsbury due to worries that the industry will see profits squeezed amidst rising costs and changing interest rate expectations.
Analyst at JP Morgan predict 2025 will see the whole grocery industry pass through cost inflation onto customers, leading to higher food cost inflation – which indeed was something the retail industry warned of last week.
The analysts have nudged up their profit estimates for Sainsbury's by 2-4%, driven by UK food inflation assumptions that are now one percentage point higher.
"The UK grocery market should remain rational for longer, in our view," the analysts said in a note to clients, based on their assumption that "improved execution" and price positioning from the two biggest supermarkets will continue, "in sharp contrast to strategies of margin preservation/maximization at key rivals Asda/Morrison."
Feeding through from the industry-wide pass-through of cost inflation, Tesco and Sainsbury's should enjoy "constructive" benefits to gross margin, cash flow and capital returns than the majority of City analysts are expecting, the JP Morgan team believes. |
https://www.telegraph.co.uk/business/2025/01/11/allan-leighton-swings-axe-at-asda-after-christmas-disaster/ |
Britain's biggest supermarkets have ramped up pressure on Rachel Reeves to overhaul the 'punitive' business rates regime.
Retailers are facing soaring costs in the wake of the Chancellor's Budget in October.
And now, the bosses of Tesco and Sainsbury's said looming increases to the levy – which is based on the value of a property and therefore hits bricks-and-mortar stores harder than online operators – could make large sites unviable.
Retailers, from independent shopkeepers to nationwide chains, face an increase in business rates in April alongside a barrage of other costs imposed by Reeves.
This includes the increase in National Insurance paid by employers and inflation-busting rises in the minimum wage.
Sainsbury's chief executive Simon Roberts sounded the alarm over the Chancellor's plan to whack up the business rates charged on larger sites so smaller shops pay less. The idea is to snare big warehouses used by the likes of online giant Amazon.
But it is feared the move will backfire as it will also hit large stores. Roberts said: 'There are big parts of the UK where the supermarket plays a fundamental role at the heart of a community, and we need to make sure that the reform of business rates makes the ongoing viability of those locations really clear.
'This is a fundamentally unfair tax, which all retailers would expect and ask the Government to look at urgently and across the sector to make sure that we don't see the continued burden that this brings.' |
J Sainsbury lost 4.3%, after Jefferies cut its price target to 300p from 325p but retained a ’buy’ rating. |
How did Asda do?
Asda has hit yet another roadblock on its road to recovery after suffering its worst Christmas since 2015.
The supermarket - which is the UK's third biggest chain - saw a sales slump of 5.8% during the festive season this year.
Asda has been struggling since it was taken over by private equity firm TDR Capital and brothers Mohsin and Zuber Issa in February 2021.
Clive Black, of Shore Capital, said the latest figures were “dreadful̶1; for Asda, adding: “The magnitude of the market share loss year on year also speaks volumes.” He said: “Leighton is, to me, a force for good, even at the age of 71. But he will need a much stronger executive team to execute whatever plans he has for stabilisation and recovery.”
The fall in Asda’s market share comes as inflation across supermarkets climbed to its highest level since March 2024. |
Argos cost Sainsbury's £1.1bln, it seems to me reasonable to say they way over paid for it.
Back in it's day 2000 to 2010, before being taken over, I remember how busy Argos stores use to be. Since being bought out, the several Sainsbury's stores I've popped into over the years that now have Argos stores in them, on the whole tend to have at best maybe one or two customers, however more usually have no customers at all. |
Russ Mould at AJ Bell observed: ‘The story with Sainsbury’s is the same as it has been for the past year: Groceries are great, Argos less so.
‘This would be fine if the supermarket chain wasn’t fussed with non-food interests, but Argos is a central part of its strategic growth plan so it has a problem on its hands.’
Citigroup’s Monique Pollard noted grocery sales were up in line with consensus, as the group continues to gain market share.
But General Merchandise growth came in weaker than expected at minus 1.5% on-year compared to Citi’s estimate of 0.9% growth. Within this Argos at minus 1.4% confounded consensus expectations for a 0.6% increase and Pollard’s own 1.0% growth estimate.
Alliance News |
Sainsbury is a good store,indeed food retailing in the UK is generally efficient and very competitive.
Shopping at Sainsbury superstore recently,i had to resort to checking out my trolley load of purchases myself,either that or queuing to ultimately reach one of only two checkouts being manned.With Reeves increasing NI plus lowering the threshold (thereby including part time workers) there might be only one manned checkout in due course :).Perhaps supermarkets could offer tempting discounts if customers were prepared to stack the shelves. |
loganair Well Said and true.
For the last 30 years we seem to have had a deliberate policy of wrecking the country, now accumulating in a £2.7 trillion debt.
No matter how much private enterprise innovates, invests, works hard, the Government is always on the take and subsequently throwing the money away and blindly. It started with Blair Labour and continued with Cameron Con,Boris Con, Rishi Con etc etc
They are continuing the recklessness.
Taxes Record High, Debt record High and no end in sight to more new highs.
I shop at Sainsbury's as I trust their own brands,they were one of only a couple of supermarket brands NOT to have been scammed by horsemeat, proving Sainsbury's do have quality control while the others just pretend in quality.
I've ditched ASDA and recent market share stats show, so have others.
Just looking for a reason to invest the shares. |
3% fall this morning predictable. Long way back and it won't happen under this government. Sell any UK domestically focussed stocks because this country is done under Starmer and Reeves. |
Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, said: 'Sainsbury's is more exposed to general merchandise than its peers through its ownership of Argos.
'General merchandise is the most cyclical area of the supermarket economy to be in, so being overweight in this arena really slows you down when times get tough.' |
Sainsburys issued a decent trading statement for the 16 weeks to 4th January this morning but the share price is down 2.2% as the pullback across retailing names extends a little to start 2025. Sainsburys sales were up 3.7%, with total retail sales including Argos up 2.7% compared to the same period a year earlier. Numbers for the 6 week Christmas period were similar with Sainsburys posting 3.8% growth. Looking forward management expect to deliver full year retail...from WealthOracle
wealthoracle.co.uk/detailed-result-full/SBRY/1128 |
"investment in lowering prices"??? To me, lowering prices in not an investment. |
According to interactive investor analyst Richard Hunter, the drop echoes a wider theme seen after a string of retailer updates this week as traders “ignore the success of the Christmas period and focus heavily on the undoubtedly challenging times to come”.
He flagged efforts by Sainsbury’s to cut prices in recent times to remain competitive against the likes of Aldi and Lidl.
Indeed, Sainsbury’s had highlighted the introduction of its ‘Aldi price match’ and record participation in the Nectar loyalty scheme over the third quarter.
“For Sainsbury, the investment in lowering prices over recent times will come under additional pressure, especially following the outcome of the measures announced in the Budget,” Hunter said. |
If the NHS was run efficiently, it could be run better for half the money.
What most Politian's, those in the media and the public at large don't seem to understand when it comes to the NHS that money is not the real thing in the equation, therefore continually throwing money at it never improves or makes anything better in the NHS.
Western democracies???? Democracy = People Rule, therefore politicians are wrong when they continually talk about being in power as in a Democracy Power is supposed to lay with the people therefore except maybe for Switzerland, no Western country is a Democracy as western countries are ruled by the people who give huge sums of money to individual politician's or party's in general, their pay masters and the companies these politicians go to after they leave office. |
Liz Truss might talk the talk but i very much doubt that she would ever of walked the walk..Thatcher respected business and as a grocer's daughter saw that healthy industry was integral to a buoyant economy but let it not be overlooked that she had the flexibility provided by North Sea oil.The trouble with the UK economy is that it is burdened by massive spend primarily on the NHS which arguably it simply can't afford.Over the last decade,spend on the NHS has grown by 3.6% pa well above the growth in the economy.The black hole that Rachel Reeves recently bleated about is dwarfed by the NHS budget of £185bn in 2024.The NHS is the central facet of socialist policies that have mushroomed in Britain since the second world war.Western democracies are simply living beyond their means. |
Third Quarter Trading Statement for the 16 weeks to 4 January 2025
Winning share at Christmas for the fifth consecutive year as more customers choose Sainsbury's
Not too bad a TU given the increase in market share, although Argos is a bit of a drag on the overall picture? |
UNDERLYING Statement out this morning |
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