Sainsbury (j) Share Discussion Threads

[tim 3] 01/7/2020 17:43

A strong online is essential but just how profitable is it when all the costs are added I suspect not very.

[tiredoldbroker] 01/7/2020 16:25

I agree that a strong online offering is essential. But does Sainsbury's have one? Argos seems to be creaking, if you look at the Twitter comments on @ArgosHelpers and @Argos_Online there are a lot of very unhappy punters.

[loganair] 01/7/2020 14:49

There is no dividend, remember. This was suspended in April, even though rival Tesco has stood by its payout. Interestingly, recent Sainsbury’s share price performance has been marginally better. It is up 7.5% in the last month while Tesco is down 2%. I suspect investors are indulging in a bit of profit-taking today, because these are good results.

The dividend will return at some point. Right now, analysts are forecasting a yield of 4.8% in 2021, and 5.1% in 2022. That is the main reason to buy into the Sainsbury’s share price – for income. Share price growth has been non-existent for years.

[loganair] 01/7/2020 14:46

Sainsbury’s wins shoppers from the discounters as it focuses on value:


With lockdown restrictions easing, Sainsbury’s has been slowly opening its Argos stores and there are signs grocery shopping is returning to pre-Covid patterns, with people shopping more regularly and smaller basket sizes – although both are still well above levels seen in March.

The shift to online shopping is expected to stick too. Some 17% of Sainsbury’s sales are now through online, compared to 7% pre-Covid, with much of this increase coming from click-and-collect. And Sainsbury’s says so far there is no sign of this dropping back down.

Shoppers are also indicating they plan to buy more fresh ingredients and cook at home more regularly, although there is expected to be some drop back as restaurants and pubs reopen.

All of this plays into the hands of the so-called ‘big four’ grocers. Sainsbury’s is not the only major supermarket to win over shoppers from the discounters, with Tesco claiming it has experienced a net gain from Aldi in the past few months for the first time in a decade.

Nevertheless, Roberts expects safety to continue to be important to shoppers and an area of differentiation for those seen to be taking the lead.

[loganair] 01/7/2020 14:00

Analysis by Luke Tugby - The figures underscored the fact that Sainsbury’s has emerged as one of the UK’s biggest winners from the health emergency – Roberts was keen to point out that the business has won customers from Aldi, Lidl and its big-four rivals during the lockdown.

But attention is already turning to the future and how Roberts might shape Sainsbury’s strategy in order to maintain such momentum once the coronavirus crisis subsides.

[spob] 01/7/2020 13:40

I think a second lockdown is inevitable here later in the year

Just looking at Airport arrivals/departures

flights now coming in from all over the world, on a daily basis

even from places like brazil, where the virus is out of control

[loganair] 01/7/2020 13:33

What the experts say:

Michael Schirrmacher, UK Managing Director at Bloomreach, believes that Sainsbury’s should be a lesson to all retailers that the key to winning in the current environment is having a good digital offering.

“As more and more consumers migrate online to purchase anything from food and clothes to medicine and even children’s toys, businesses are fast realising that they can no longer afford to have a weak online presence: today, shoppers are more likely to connect with a brand online first before making their way to a high street branch,” he says.

According to Bloomreach’s State of Commerce Experience report, 90% of customers have changed their behaviour as they avoid physical stores, putting discretionary spending on hold and buying exclusively online or as much as possible. Half of customers even said that they are shopping on digital channels for products they’ve never bought online before.

And this is having a huge impact on investment: in the same report, the company found that investment in brick and mortar stores has dropped by almost 30% since the start of the lockdown (from 52% to 24%).

“This shows that businesses understand the urgent need to enhance the digital experience they are offering customers who all think digital first,” says Schirrmacher. “Shoppers are more unforgiving than ever before when it comes to a bad digital experience, and brands simply can’t afford to lose customers to their competition because a product was hard to find, or it took too long to load a page. Whether your business is in survival, adaptive, or growth mode, now is a critical time to reallocate funding to deliver enhanced digital experiences and set your business up to be more competitive as the world shifts to a new normal post-pandemic.”;


Neil Shah, Director of Research, Edison Group, sounds a note of caution. “Despite strengthening sales, increase in costs related to reacting to the crisis will clearly weigh in or earnings this year as the company expects flat underlying pre-tax profit for the 2020-21 year.”

He adds: “All of the UK’s major supermarket groups have seen grocery sales boosted during the lockdown, and both Sainsbury and Tesco have been clear winners of the back of their vast network of superstores supported by an increase of online demand and local convenience stores.”

Shah concludes: “However, investors should keep a close eye on Sainsbury and be slightly cautious around the company´s growth over the past months. With lockdown easing and normality returning, it will be interesting to see how the company, who has been losing market share for the past few years, manages to keep up with their positive sales and growth."


Joe Healey, Investment Research Analyst at The Share Centre adds: “This is a strong update from Sainsbury which has performed better than expected as it continues to invest in lower prices alongside improving its stores.”

Healey continues: “The group has also showcased its flexibility to manage the increase in capacity from the pandemic effectively. Nearly 50% of new online groceries are from new customers with the supermarket now taking over 650,000 orders a week compared to just 370,000 pre-crisis. The flexibility to double capacity speaks volumes of the technology and digital platforms Sainsbury operate and will be something investors will be very pleased with moving into the future.”

He concludes: “However, it’s important for investors to remember these results were always going to be higher thanks to the combination of consumers purchasing bigger baskets and good weather. Whether this theme will continue is unlikely. It is prudent to see management are not expecting this sales growth to continue considering the uncertainty we still have surrounding consumer spending and something which investors should bear in mind.”

[spob] 01/7/2020 13:23

hampsters pushing trolleys and driving vans but going nowhere

meaning - no profit

LOL

[spob] 01/7/2020 13:20

How many hampsters does Sainsburys employ in their online operation now ?

The wage bill must be astronomic

[loganair] 01/7/2020 12:17

Since then Aldi/Lidl have taken c14% market share away from the big 4 supermarkets.

[tim 3] 01/7/2020 12:16

I think they are getting extra business because people feel safer at Sainsburys because they are strict about how many they let in and social distancing, whether they will keep those customers in the long term is a different matter.

[muffinhead] 01/7/2020 11:49

hmmn


1998 I could find

>>>>>>>>>>>>>>>>>>>>>>
Preliminary Results 1997/98
Key Points

Group sales increased by 8.3% to £15.5 billion and Group operating
profit increased by 14.7% to £854 million

Group profit before tax increased by 11.8% to #728 million.

Sales of Sainsbury's Supermarkets increased by 7.5% to #11.6 billion
and operating profit increased by 11.1% to #735 million.

Homebase increased its operating profit from #16 million to #55
million.

UK profit sharing up 19.6% to #44 million.

Fully diluted earnings per share before exceptional costs and property
items increased by 13.4%.

Dividend per share increased by 13.0% to 13.9p.

<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

last bit makes you want to spit

[loganair] 01/7/2020 11:45

1970's to mid 1990's Sainsbury had a c8% margins as did Tesco's during the 1980's and 1990's now both these supermarkets run at about c2% margins.


M&S are even worse off as in the early 1990's they were the first retailer to make £1bln in profits ($5bln in todays money) while today they can barely make £500mln.

[muffinhead] 01/7/2020 11:42

lol

we're in the money bye bye

hello boys, we're on a hamster wheel

[spob] 01/7/2020 11:23

This company was making near 800m a year on roughly 10 Billion sales about 30 years ago

Now they make almost nothing on 30 Billion in sales


Sainsburys reminds me of a mouse running on a treadmill

lots of activity

running very fast

but going nowhere

[loganair] 01/7/2020 11:03

John Moore, senior investment manager at Brewin Dolphin, commented: The ‘buy at Argos and collect at Sainsbury’s217; strategy worked well during lockdown and this is likely to accelerate a review of the Argos property estate in time, which may deliver some cost savings and efficiencies.'

'Supermarkets have been relatively resilient throughout the pandemic,' added Moore. He noted they are 'one of the few businesses that can continue to operate meaningfully, but the key questions from here are around costs and business adaptability in a changing retail environment.'

'There is still work to do for Sainsbury's, but it meets these challenges in good financial shape.

[loganair] 01/7/2020 11:02

Sainsbury's new boss should turn the dividend tap back on now Aldi and Lidl are back in their box:


At last, some bad news for the German supermarket discounters.

Aldi and Lidl have been getting a pasting in the grocery wars over the coronavirus crisis months, to the advantage of our home-grown supermarkets. Most notable beneficiary? Turns out to be Sainsburys.

The discounters have suffered for two reasons: firstly, they can’t do online because it’s too expensive for their cut-price model. Second, in our terrified state of recent months, we Brits have been trying to do as few visits to the supermarkets as possible. That has meant a preference for doing all our shopping at a one-stop bog roll-to-barbecues shop like Sainsbury’s rather than topping up by hunting for bargains at Lidl.

Sainsbury’s online home delivery orders have pretty much doubled over the past quarter in number, with people buying more in each transaction. That makes for great revenue numbers, but the impact on profit margins waits to be seen.

The company says its online operation would have made a profit for the past three years if it had been a standalone business, but still refuses to say how much. The suspicion is, not a lot.

More profitable will be click and collect, which has also boomed in the big behavioural Covid shift.

All this brings in an interesting dynamic for the property end of the business. The story with big grocers for a decade and more has been about ditching megastores for inner city convenience shops.

Now, Sainsbury finds its bigger sites are vital as most customers are staying away from the city as they work from home and the big stores serve the online division.

New chief Simon Roberts tempered any share price boost today with a rightly cautious note on the economy (so temper your enthusiasm about Argos). But the longer term trends are in his favour. Time to pay the dividend Sainsbury’s deferred in April.

[spob] 01/7/2020 10:54

Penny for the Guy

Anyone here expecting them to declare a final and interim dividend on Guy Fawkes Day

[spob] 01/7/2020 10:47

strong hold ?

in other words... sell

Lol

[loganair] 01/7/2020 09:33

Julie Palmer, partner at Begbies Traynor, said the new chief executive now faced the task of "navigating the supermarket through the murky economic waters of covid-19".

"Although grocery sales have spiked during the past few months, the increased costs retailers have had to absorb from disruptions to the supply chain and the implementation of social distancing measures have rocked the boat, with the business's profitability taking a hit," she said.

Richard Hunter, head of markets at Interactive Investor, said Sainsbury's had demonstrated "an ability rapidly to evolve within a new environment".

"If the pandemic has marked a sustained change in consumer behaviour, Sainsbury's will be well placed to benefit. In particular, its digital capabilities and the possibility that shoppers might lean more towards the click-and-collect option in future would play directly into the group's hands," he added.


In all, Sainsbury’s has had a largely successful quarter as it has demonstrated an ability rapidly to evolve within a new environment. Initial reaction to this progress has been positive, injecting some life into a share price performance which has remained largely unchanged over the last quarter.

Over the last year, the group has displayed a rather more defensive quality, with the shares having risen 6.5%, which compares to a decline of 18% for the wider FTSE 100 index. Even though Sainsbury’s may not be the preferred play in the sector, the market consensus of the shares as a ‘strong hold’ could come under some upward pressure after this update.

[loganair] 01/7/2020 07:39

The profit hit from the crisis was expected to be more than £500m, as previously guided, but it would be "broadly offset by business rates relief and stronger grocery sales", Sainsbury's said.

The company has not taken up Government support in the form of the furlough schemes or delayed VAT payments, although it has accepted £450 million in business rates relief for the year.

Outlook:

Sales growth has been stronger than base case assumptions outlined in April, helped by good weather. However Sainsbury's is cautious about the sales trajectory for the rest of the year given the weather benefit to date and a likely further weakening of consumer spending.

[loganair] 01/7/2020 07:35

Sainsbury’s in ‘strong financial position’ after more than doubling online sales
Supermarket giant Sainsbury’s has announced a higher than expected sales performance despite the disruption caused by COVID-19.

The firm has reported a 10.5 per cent increase in grocery sales, as well as more than doubling its online revenue, since the coronavirus crisis began.

In addition, the company’s clothing and fuel sales have started to recover “more quickly than expected” and its financial services business has an improved capital position compared with the year end.

[buywell3] 01/7/2020 07:16

P/E of 35.98

Seems a tad rich to buywell IMO

[rolo7] 01/7/2020 07:14

Got to include fuel so now q2 sales will be down v last year noone driving.