Hopefully get a nice run up towards results 16th April.
Maybe a boost from new ISA money soon too given yield is currently >5%
Guess we'll see :) |
 Is this a buying opportunity?
Investors might be wondering if now is the time to buy the dip.
Perhaps not, Coatsworth says, warning: 'Sainsbury's, Tesco and M&S were all bullish last year as they were fighting off competition from discounters Aldi and Lidl and doing incredibly well.
'It could be hard to sustain momentum in 2025 and recent share price weakness is the market's way of saying the shine is coming off the sector.'
Even so, there could be shine left, and a behemoth like Tesco, Hunter said, is still in a strong position.
'Its sheer scale feeds its appetite for lowering prices for customers through the likes of Aldi Price Match, Low Everyday Prices and Clubcard Prices, while a strong focus on significant cost reduction creates something of a virtuous circle,' Hunter said.
Streeter added that the firm's 'deep-rooted supplier relationships and free cash pumping around the business, should ensure it stays relatively resilient in these price skirmishes, particularly if they become drawn out.'
Sainsbury's too is not going to back down from the fight.
Streeter said: 'Nectar prices and Aldi price matches are working at plugging the exit of customers, and it's also upping the ante with its premium Taste the Difference range to spark more appetite among more affluent shoppers.'
Nectar prices are expected to provide £100million worth of incremental profit over the next three years.
'Full-year guidance was for underlying retail operating profit to grow around seven per cent to just over £1billion, but the company will have to pedal hard to keep that target in sight,' Streeter said.
M&S should benefit from its strong diversification away from food retail.
Even then, Streeter argues M&S Food's 'bread and butter' will still come from customers who are 'more likely to have paid off their mortgage and so have higher disposable incomes, so should keep it more resilient, even if shoppers tighten their belts further.'
Hunter said: 'M&S has no intention of resting on its laurels and has articulated an ambitious next leg of growth, and the market consensus of the shares as a buy echoes the optimism for prospects.'
Black said: 'I would say M&S, Sainsbury's and Tesco shares look oversold and, as such, they are a buying opportunity for investors.' |
How will a price war affect share prices?
If the share prices of competitors are anything to go by, investors are under the impression there is a rocky period ahead.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: 'The companies have struggled to recover from the hit to confidence indicating that shareholders are expecting a period of intense competition.'
Combined, the firms saw £4.1billion off their value wiped off in just a few days.
Dan Coatsworth, investment analyst at AJ Bell, said: 'The prospect of a fierce price war which will kibosh any plans to pass on wage and National Insurance increases.
'Profit margins could weaken, leading to analysts downgrading earnings forecasts and share prices falling further.'
The supermarkets also need to compete with the likes of unlisted Morrisons, Lidl, Aldi and the Co-op.
'Morrisons is closing services seen as nice-to-have but not essential and scaling back its convenience footprint as it readies for the round of cost-cutting from rivals.
'The Co-op has just revealed it's investing more than £70 million into matching prices with Aldi on 100 everyday essentials,' Streeter said.
How will the listed supermarkets react?
The fall in supermarket share prices aren't necessarily an indicator that Asda will win out in any price war, according to Clive Black, head of consumer research at Shore Capital.
'Asda has put the cat amongst the pigeons in terms of pricing rhetoric, which has concerned the market about the danger of a price war, which could impact gross profit margins and so earnings for the listed supermarkets,' Black said.
He added: 'The key word here though is "could", because we are not in a price wars yet… Asda's competitors will not be sitting on their hands, as we argue, having being forewarned, and in the main they are well set up to adjust, and better set up in truth than Asda.'
These supermarkets aren't going to sit by and allow Asda to steal their market share.
Tesco, Hunter says, is better prepared to weather the storm.
'Its sheer scale feeds its appetite for lowering prices for customers through the likes of Aldi Price Match, Low Everyday Prices and Clubcard Prices, while a strong focus on significant cost reduction creates something of a virtuous circle.'
Sainsbury's, meanwhile, is facing increasing consumer demand for cheaper non-essentials, with competitors focusing on the space.
Hunter says this 'has somewhat left Sainsbury trailing and with potentially more to follow.'
He warned: 'Sainsbury could perhaps be more of an initial casualty.' |
Is it a good time to buy shares in Tesco, Sainsbury's and M&S after recent price falls?
Last week, supermarket chain Asda slashed prices across 1,500 of its products by as much as 45 per cent.
The move kicked off the beginnings of a price war among supermarkets, as the UK's third biggest supermarket looks to win back customers, having seen its market share fall to 12.6 per cent from 13.7 per cent over the past year.
Asda has now slashed prices on 10,000 products since the end of January, with its new chief executive, Allan Leighton, promising he will 'continue to invest in lowering prices across the rest of the year and beyond'.
Cuts to the price of staples at the checkout are good news for shoppers, but it isn't such good news for Asda's competitors, or shareholders in these firms and as a result, share prices in the three listed companies plummeted.
Shares in Britain's largest supermarket, Tesco, slipped 13.5 per cent between 13 March and 19 March. At the time of writing, Tesco shares were trading at 332.3p.
Meanwhile, Sainsbury's shares dropped 8.8 per cent between 13 and 17 March. Shares are currently trading at 237.8p.
M&S shares fell 9.1 per cent over the same period and are trading at 340.9p. While not strictly a supermarket, a big chunk of its sales do come from its grocery division.
This year so far, the three firms are down 10.9 per cent, 14 per cent and 12.8 per cent respectively.
The highest the Tesco share price has ever reached is 606.7p in November 2007, so is has fallen 45.2 per cent from its peak.
Sainsbury's peaked at 587.50p in July 2007 and M&S 699.62p in May 2007. It means they have slipped 59.5 per cent and 51.3 per cent from their peaks respectively. |
Customer complains about supermarket moving location of food , I guess it must be a quiet day for news in Kent! |
24th March 2025 - UK Supermarkets Locked in a Fierce Price War: Who Will Survive?
The British retail industry is experiencing one of the most aggressive price wars in recent memory, as major supermarket chains battle for survival in an increasingly challenging economic climate. With inflation squeezing household budgets and shoppers growing more reluctant to spend, UK supermarkets such as Tesco, Asda, and Sainsbury’s are engaged in a relentless struggle to outprice each other.
The Supermarket Battleground:
The UK’s grocery sector has long been one of the most competitive markets in Europe, with supermarkets constantly adjusting their strategies to retain customer loyalty. However, the current price war has reached an intensity not seen in years.
Tesco, the market leader, has doubled down on its price-matching strategy with Aldi, ensuring that its value proposition remains strong against the German discounter.
Asda has focused on offering deeply discounted essentials, particularly through its ‘Just Essentials’ range, aiming to capture budget-conscious shoppers.
Sainsbury’s, traditionally perceived as a mid-tier supermarket, has aggressively cut prices across its key product categories to compete with both premium and discount retailers.
Aldi and Lidl, the German discount giants, continue to dominate the value segment, forcing traditional supermarkets to slash margins to stay relevant.
A Battle for Survival:
The consequence of this price war is a significant squeeze on supermarket profit margins. While lower prices benefit consumers, retailers are being forced to absorb the financial hit, leading to job cuts, supplier pressure, and store closures in some cases.
Some retailers are attempting to offset these pressures by investing in automation, streamlining operations, and reducing overheads.
The Future of UK Grocery Retail:
The battle among UK supermarkets is far from over. The industry is shifting towards a landscape where only the most adaptable retailers will survive. With consumers increasingly searching for the best deals, the pressure to deliver quality at lower prices will only intensify.
Who will emerge victorious in this brutal price war? Only time will tell. But one thing is certain—UK supermarkets can no longer afford to stand still in an environment where survival depends on constant reinvention and strategic pricing. |
In an increasingly competitive retail landscape, major UK supermarkets such as Asda, Tesco, and Sainsbury’s have been cutting margins to attract and retain customers. With inflation impacting consumer spending habits, these retailers have focused on price reductions to maintain footfall. However, reducing profit margins alone is not a sustainable long-term strategy. Cutting overheads is equally, if not more, important in ensuring continued profitability.
The Need for Efficiency:
Supermarkets operate on tight margins, and while price competition is necessary, operational efficiency is the key to maintaining financial health. Cutting overheads involves streamlining supply chains, optimising store layouts, reducing energy costs, and leveraging technology to improve productivity.
Supply Chain Optimisation:
Retailers are increasingly turning to data analytics and artificial intelligence (AI) to improve supply chain efficiency. By using predictive analytics, supermarkets can better manage stock levels, reduce waste, and optimise delivery schedules. Automated warehouses and AI-driven demand forecasting are already in use by major players, allowing them to cut logistics costs significantly.
Energy and Sustainability Savings:
Reducing energy consumption is another key way supermarkets are cutting overheads. Many are investing in energy-efficient refrigeration, LED lighting, and solar panels to lower electricity bills. Sainsbury’s, for instance, has committed to reducing its carbon footprint and energy consumption, which directly translates to cost savings.
A Balanced Approach:
While price competition remains an essential strategy, supermarkets must balance margin reductions with effective cost-cutting measures. Those that successfully integrate technology, sustainability, and operational efficiency will be best positioned to thrive in the evolving retail landscape.
As the retail industry continues to evolve, the question remains: how far can supermarkets go in cutting overheads without compromising customer experience? |
Asda is doubling down on its commitment to value by reducing prices by up to 45% on 1,500 “family favourite” items.
The move means that nearly 10,000 of the supermarket’s products, or almost a third of its range, are now part of its Rollback price cut initiative, which Asda brought back in January. |
Instead of continually focusing on grocery prices it seems to me more and more important for Sainsbury's to focus on reducing their Operational Costs, the basics of running any company thereby maximising their revenue per square foot of retail space.
The first thing I notice when I go into my local store is how many of the shop floor staff are just standing around chatting. It's not unusual to see 3, 4 or even 5 members of staff down one isle social chatting instead of getting on with their work stacking shelves or what ever else they are employed to do. |
That's a surprise when ASDA has lost most of its market share to Aldi/Lidl. |
All a BUY rating means, the brokers target price is currently 10% higher then the current share price. |
No they havnt, UBS has cut their price target while maintaining their buy rating. |
HSBC raises Sainsbury's to 'buy' - price target 285 pence |
Https://uk.investing.com/news/stock-market-news/rbc-sees-a-buying-opportunity-in-uk-food-retail-stocks-3988210 |
Brokers targets are either the highest if higher then the current share price or lowest if lower then the current share price they forecast a price of a share to reach within a 12 month period. |
tb, brokers targets are usually on a 12 month basis. |
Is that a 12 month price target or less Phil? |
UBS cuts J Sainsbury price target to 279 (321) pence - 'buy' |
future price reductions? I think Asada's rollback investment is live and kicking now - but I take your point about making adjustment to future earnings off the back of a competitors revised strategy. |
2000 Inflation adjusted dividend = circa 70p today, therefore Sainsbury's dividend has fallen by 80% in real terms over the past 25 years. |
You are unlikely to amend a forecast based upon the future price reductions of a competitor when it not factored through yet I would have thought. Decembers Divi was 3.9p, the next one is announced in late April, 4.5p expected? |
Will SBRY now amend FY26 forecasts do we think of the back of Asda's recent announcement |
Sellers back again. |
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