Sainsbury (j) Share Discussion Threads

[loganair] 17/4/2022 15:33

The 5 years (2012-2016) before Sainsbury's bought out Argos, on Average Argos yearly profits where circa £100mln on £4bln yearly turn over.

I forgot to mention in 2016 as well as Argos stand a lone stores there were also 57 Argos stores in Homebase and 37 Argos collection points plus the 8 Habitat stores which have now all been closed.

Sainsbury's have been struggling to make decent profits since the mid 1990's as their heyday was from the mid 1960's to the early 1990's, since then its been Tesco all the way.

[debsdowner] 17/4/2022 15:17

loganair, according to your brief analysis charges are going to muddy the water in SAINSBURYS accounts for some time.

Presumably the closures and cost savings on the High Street going to improve margins and profitability

I don't know what ARGOS was makimg before they bought out ARGOS and how much they will make after the closures are complete?

But SAINSBURYS has been struggling to make decent profits for 5 years now, just like MARKS.

Mind you Morrinsons and ARGOS are both losing market share some of that loss to both ALDI and LIDL.

I am also sceptical about SAINSBURYS price match against ALDI, TESCO tried this but I don't think it made much difference as both ALDI and LIDL racing ahead.

SAINSBURYS must be losing market share to the discouters, the market is saturated and competitive.

I remember Justin King warning after the last financial crisis a big supermarket could easly go under he got out at the right time, after he ledt SAINSBURYS sales and profits started to struggle.

Margins are so small it will only take a small percentage drop in sales to hit profits.

Was ARGOSD a good buy ? It is too early to say but your anaysis makes it questionable.

[loganair] 17/4/2022 14:46

Sainsbury’s wants to open more Argos outlets in its supermarkets and plans 350 of these by March 2024. It also announced last year it planned to slash Argos branches due to changing shopping habits following the pandemic.

As a result, 420 standalone stores are being closed across the country, which will leave just 100 on UK high streets by 2024.


In 2016 Argos had 583 stores most of which where stand alone stores while by 2024 will be left with 450, most of which will be outlets in Sainsbury stores and not be stand alone stores. This also means an overall reduction of 133 stores/outlets (23%).

So far Sainsbury has taken £438mln in charges on the cost of Argos closures and by 2024 expects this figure to reach £1bln.

£1.4bln to take over Argos + £1bln in costs by 2024 which means the total cost for Sainsbury to take over Argos will be at least £2.4bln by 2024 while Sainsbury's market cap is no higher today then it was in 2016 when they took over Argos, it's with in just £100mln.

I ask myself - Was Argos a good buy for Sainsbury?

[debsdowner] 17/4/2022 13:56

Time to sell Blackrock and another heavyweigh shorting MARKS & SAINSBURYS:

Two of the world's most powerful investors are betting against Marks & Spencer in a blow to its new chief executives.

The Mail on Sunday can reveal that BlackRock, the world's biggest asset manager, and hedge fund Marshall Wace are shorting the retailer's stock.

The funds have disclosed the combined £35million short position just weeks after the retailer announced that food boss Stuart Machin will become chief executive, alongside Katie Bickerstaffe.

Richard Hyman, partner at retail consultancy TPC, said: 'The M&S leadership team has focused too much on food and not enough on investing in fashion – which is higher margin.'

M&S's decision to employ an unconventional management structure has created uncertainty. Hyman said: 'It strikes me as a cop-out. It's very difficult to have two chiefs.'



With consumer spend set to hit retail sales Blackrock evidently feels MARKS will dissapoint.

[debsdowner] 17/4/2022 13:55

Time to sell Blackrock and another heavyweigh shorting MARKS and SAINSBURYS:

Two of the world's most powerful investors are betting against Marks & Spencer in a blow to its new chief executives.

The Mail on Sunday can reveal that BlackRock, the world's biggest asset manager, and hedge fund Marshall Wace are shorting the retailer's stock.

The funds have disclosed the combined £35million short position just weeks after the retailer announced that food boss Stuart Machin will become chief executive, alongside Katie Bickerstaffe.

Richard Hyman, partner at retail consultancy TPC, said: 'The M&S leadership team has focused too much on food and not enough on investing in fashion – which is higher margin.'

M&S's decision to employ an unconventional management structure has created uncertainty. Hyman said: 'It strikes me as a cop-out. It's very difficult to have two chiefs.'




With consumer spend set to hit retail sales.

[loganair] 17/4/2022 09:06

Discretionary spending in general will go out the window.

[loganair] 16/4/2022 20:12

Inflation is a real threat for grocery shares like Sainsbury’s and Tesco given their wafer-thin profit margins. Indeed, the retail underlying operating margin at Sainsbury’s slumped to 3.37% in the first half, down 40 basis points year on year.

High inflation will likely prove to be a temporary problem. What won’t, however is the intensifying threat posed by its competitors on the ground and in cyberspace.

At the same time, Sainsbury’s needs to spend to stay in reach with its established rivals like Tesco and the discounters Lidl and Aldi.

The business has parked hundreds of products under its Price Lock guarantee to keep shopper costs low. It’s likely going to need to keep slashing prices at the expense of margins to stop cash-strapped shoppers deserting for its cheaper rivals.

Sainsbury’s has spent on its online business is paying off. Digital sales jumped 92% in the 16 weeks to 8 January on a two-year basis. It suggests that the FTSE 100 firm could really make a splash in the fast-growing e-grocery industry.

High inflation will likely prove to be a temporary problem. What won’t, however is the intensifying threat posed by its competitors on the ground and in cyberspace.

Aldi and Lidl are hastily expanding their store footprints across the UK. Amazon is also investing heavily in stores as well as its online operations. And all of the country’s major grocers are bulking up their online operations too.

And talking once more of dividends, I like the fact that the predicted full-year payout of 12.2p per share for Sainsbury’s looks quite well protected.

That City estimate is covered 1.9 times by anticipated earnings. This is roughly in line with the widely-accepted security benchmark of two times.

What’s more, in January Sainsbury’s said that free cash flow remains “strong”. It also said that it should hit its net debt reduction ahead of target, in an extra boost to the balance sheet.

[plat hunter] 16/4/2022 11:14

Look at Tesco's performance then throw in Argos on top of that, right after the whole country went mental for 2 years in the supermarket and online ordering, electronics, kids stiff, home and garden etc etc.Huge divergence occurring on the chart, coincidence or confluence?

[loganair] 15/4/2022 13:34

I ask myself - What is Sainsbury doing about increasing its margins?


Tesco profit before tax rose 220% last year, as sales rose and costs fell. Revenue excluding fuel rose by 6% and the company’s operating profit margin increased from 2.7% to 4.2%.

CEO Ken Murphy is also “laser focused” on keeping the cost of its wares down, as Tesco does “everything221; it can to maintain its value proposition.

Management has the flexibility to continue to reduce operating costs and return the savings to consumers.

Tesco plans to reduce costs by £1bn over three years by streamlining its property footprint and cutting head office costs. It is also re-thinking the way staff are deployed in stores.

Tesco’s supply chain is miles ahead of the competition. It has been able to navigate the UK’s supply chain issues by investing in new and old technologies, such as electric HGVs and rail.

Over the past year, the retailer has increased the number of its containers transported by rail by nearly 50%, with plans to increase capacity by around a third in the near future. Each train takes around 40 HGVs off the road, slashing the number of drivers required in a tight labour market. By transporting fresh produce from Europe by rail, the company has also been able to bypass Brexit-related disruption at the Calais-Dover pinch point.

Tesco stands apart from the crowd as uncertainty builds.

[philanderer] 13/4/2022 09:23

TSCO read across, oh dear.

[spob] 12/4/2022 14:47

trusted ?


for future reference

Publically released Broker notes = Toilet paper


All the more so, if written by a house broker

[rudder] 12/4/2022 10:08

Looks like Jefferies can’t be trusted.

[loganair] 11/4/2022 09:50

The so called top 4 supermarkets are not made for going up against the likes of Aldi and Lidl and all they can do is to penny pinch in the wrong areas to try and reduce their coasts.

[philanderer] 11/4/2022 09:46

Sainsburys was boosted by an upgrade to 'buy' at Jefferies.

Sharecast

[philanderer] 08/4/2022 14:37

Sainsbury’s introduces London Living Wage for staff amid investor pressure — but cuts jobs

[atmysignal] 08/4/2022 12:04

Monkey's would take offense to such comparisons

[keyno] 08/4/2022 11:12

spob: then the public could toss them peanuts as a reminder of what they have been paying their staff.

[m_kerr] 04/4/2022 18:43

spob - people often forget that private equity quite like buying poorly managed assets as it's low hanging fruit to increase profits. the share price tends to be low, and people often give up on the shares, making a premium easy to justify.

[spob] 04/4/2022 08:17

They should outsource the entire Sainsbury's board to the Monkey cage at London Zoo.

I'm sure there would be a significant improvement.

[loganair] 01/4/2022 20:37

Supermarket giant Sainsbury's is axing jobs at its city centre Arndale office as it looks to cut its costs, it has been confirmed. Jobs will instead outsourced to Mumbai in India.

Roles across food commercial, finance operations and people services and HR are being outsourced to the firm Accenture.

Staff were made aware of these impending changes yesterday. The email, seen by the Manchester Evening News , written by CEO Simon Roberts, says the company needs to 'save to invest' and that they 'must keep moving at pace to become more efficient and embed simpler and better ways of working'.

Mr Roberts added to employees: "I do want to be upfront that as we look to the future, we have to keep looking across our business for ways we can be simpler and more efficient. This means over time we will need to consider in what further ways this approach could help us continue to simplify our business."

This is the latest in a line of measures from Mr Roberts to 'save and invest' and to rival discount supermarkets such as Lidl and Aldi. In November 2020 the store revealed plans to permanently close its in-store meat, fish and deli counters while earlier this year the supermarket said it would close 200 cafes, 34 hot food counters and 54 bakeries putting thousands more jobs at risk.

[m_kerr] 01/4/2022 18:20

supermarkets like sainsbury's should be holding financial debt at 3% fixed, not lease debt at 4-5% with RPI uplifts. even now, sainsbury's management seem to be prioritising reducing their exposure to cheap financial debt ahead of expensive lease debt.

so capital allocation has been awful here. for a contrast on how better management can drive better shareholder returns in the same sector, look at how walmart ran asda. no convenience stores, 75% freeholds, correspondingly much less exposure to onerous leases, and unlike sainsbury's, tesco and morrisons, no more ultra low return expansion after the financial crisis. the result? uninterrupted high cash dividends throughout their 20 year ownership, including a £1.1bn dividend prior to the sale to the ISSA / TDR consortium, and £1.4bn in 2003.

however, in their favour remains a huge property portfolio probably worth £10bn. set against that is £6.3bn of lease liabilities (up £400m YOY), which will jump further as those RPI uplifts kick in. at the right price this is a solid asset backed investment, but even as it's fallen 30% as the herd backed off somewhat, i feel this is lower than the current share price.

[loganair] 01/4/2022 11:29

Over the past 25 years Sainsbury's basically haven't gone anywhere, all the successive CEO's have managed to do is to tread water as they've been clueless on how to move the company forward and upward.