Sainsbury (j) Share Discussion Threads

[philanderer] 02/7/2024 09:33

Edison analyst Russell Pointon commented: "Sainsbury's Q1 trading update reveals a 2.6% rise in total retail sales, demonstrating its strong market presence, against a very tough comparative.

The effects of reducing inflation are apparent in slowing like-for-like growth in every quarter since Q124. The quarter's success is highlighted by Sainsbury's achieving the largest market share among grocers, driven by a 4.8% increase in grocery sales.

Notably, their summer innovation in food has spurred a 10% growth, with the introduction of over 400 new products."

[philanderer] 02/7/2024 09:25

Trading statement

Away from grocery, the picture was less bullish for the firm. General Merchandise & Clothing sales were down 4.3%. Argos sales fell 6.2%. "Sainsbury's General Merchandise & Clothing performance reflects improvement in clothing trend offset by weaker seasonal general merchandise sales," it said. "Argos sales declined against a particularly strong comparative period with significantly lower seasonal sales and weaker consumer electronics demand, notably in gaming."

[blackhorse23] 02/7/2024 08:26

Switched to RNK [better change to capital gains] 4 brokers issued strong BUY

[philanderer] 27/6/2024 18:39

Sainsbury's: geared for growth ahead of Q1 trading statement

[loganair] 27/6/2024 14:38

Morrisons plans to open 400 more Morrisons Daily shops in a bid to take on rivals Aldi and Lidl.

The Bradford-headquartered retailer, which has branches in Gloucester and Cheltenham, is aiming to grow from 1,600 to 2,000 smaller stores by the end of 2025.

New CEO Rami Baitiéh, who joined Morrisons from Carrefour last year, noted its Aldi and Lidl Price Match initiative, which launched in February, had got off to a "great start" and "is giving customers increasing confidence in the competitiveness of our prices across the shop."

He added: "Convenience remains an important and strongly growing channel for us.

"With the McColl's conversion programme now complete and the recent acquisition of 38 stores in the Channel Islands, we have over 1,600 Morrisons Daily convenience stores across the country, about two thirds of which are wholly owned.

"With this strong growth trajectory we are now targeting a total of 2,000 convenience stores in 2025."

[loganair] 27/6/2024 14:35

In its recent capital markets update, the Sainsbury's outlined plans to increase consumer spending in key categories where it currently underperforms, like frozen foods and household chemicals. It will also continue leveraging strengths in fresh foods while finding efficiencies across operations.

​A core priority is growing sales in the frozen food and household chemicals categories. Sainsbury's believes there are significant opportunities in these areas where competitors have larger market share. By focusing innovation and marketing efforts here, it aims to entice customers to spend more per shopping trip. Success could also bolster Sainsbury's broader grocery proposition.

​The company will build on existing strengths in fresh foods like produce, meat and bakery. Sainsbury's has an established reputation for quality in these areas, which it can leverage through focused enhancements to product ranges and in-store experiences. Maintaining leadership in fresh foods helps attract customers and drive frequency of purchase.

​Expanding its physical footprint in areas where market share is currently low is another priority. Sainsbury's has plans for a wave of new store openings to grow its presence across the United Kingdom. Entering these underserved regions would allow Sainsbury's to reach more shoppers nationwide.

​As Sainsbury's pursues multiple avenues for growth, it remains committed to cost control and operational efficiency. Finding cost savings and supply chain improvements is viewed as essential, even as new stores open and product offerings expand. This balancing act allows Sainsbury's to stay competitive in a highly challenging grocery landscape.

In summary, Sainsbury's growth plans target both new customers and offerings, while consolidating existing strengths. Key focus areas are increasing consumer spend on frozen foods and household chemicals, continuing innovation in fresh foods, utilizing Nectar data, expanding through new stores and maintaining tight operational controls. Delivering on these strategic initiatives would help Sainsbury's gain market share while preparing for long-term success.

[loganair] 21/6/2024 10:19

Look at all the retail companies Private Equity have destroyed over the past few years:


Debenhams, Woolworths, Comet, Toys R Us, Lloyds Pharmacy, Somerfield Supermarkets, EMI to name but a few and they're now doing the same with both Asda and Morrisons.

[loganair] 21/6/2024 10:14

Asda in crisis as its market share hits record low: Grocer hit by soaring interest rates:


The crisis at Asda deepened yesterday as figures showed its slice of the grocery market has crashed to the lowest level on record.

Data from industry research group Kantar showed the private equity-owned supermarket now holds a 12.8 per cent share.

Asda has been flailing since the Issa brothers joined forces with private equity giant TDR Capital to buy it in a £6.8billion debt-fuelled deal three years ago.

Soaring interest rates have driven up the cost of borrowing while shoppers have flocked to rivals, including discounters Aldi and Lidl, as well as Tesco and Sainsbury's.

Asda's market share is the lowest it has been since Kantar started sharing the numbers in 2011. It is a dramatic fall from the 13.7 per cent it held a year ago.

The figures are a bruising setback after an earlier trading update raised hopes the supermarket could be at the start of a revival. In April, it posted a small return to profit for 2023.

Once Britain's second biggest supermarket, the group has lost ground to traditional rivals Tesco and Sainsbury's as well as discounters Aldi and Lidl.

According to Kantar, Asda sales in the 12 weeks to June 9 totalled £4.3billion – down 4 per cent on the same period a year earlier.

All its rivals saw sales rise with Lidl up 8.1 per cent, Sainsbury's 4.9 per cent, Tesco 4.6 per cent, Morrisons 1.1 per cent and Aldi 0.8 per cent.

Last week, Zuber Issa sold his shares in Asda to TDR. This means the London buyout company is Asda's majority owner, while Mohsin Issa still holds 22.5 per cent.

The search for a chief executive continues with Asda having been without one since 2021.

Mohsin Issa said earlier this year he was carrying out a 'reset' of the company before hiring a boss. But retail experts say the supermarket will struggle to return to its former glory.

It is 'inevitable' that Aldi will become bigger in the next two years, Jonathan De Mello of the JDM Retail consultancy said.

Aldi holds 10 per cent of the market. Lidl has boosted its share over the year from 7.7 per cent to 8.1 per cent.

Tesco hit its highest share since February 2022, growing 0.6 percentage points to 27.7 per cent. Sainsbury's holds 15.2 per cent of the market, compared to 14.9 per cent last year.

Morrisons, also owned by private equity, has performed poorly, too, it now only holds 8.7 per cent of the market.

[loganair] 21/6/2024 10:10

Asda’s acquisition by TDR Capital, while financially lucrative, raises questions about the long-term sustainability of private equity ownership in the supermarket sector. PE firms often operate with a short-term focus, aiming to boost profitability quickly through cost-cutting measures and increased operational efficiencies. However, this approach can lead to significant disruptions in the workforce and may compromise the quality of service, ultimately affecting customer satisfaction and loyalty.

Financial Impact on Supermarkets:

Morrisons, once a staple of the British grocery market, now finds itself struggling under the weight of financial losses and mounting debt. Following its acquisition by a private equity consortium led by Clayton, Dubilier & Rice, the supermarket reported a staggering £1 billion loss. Debt payments have soared, straining the company’s finances and forcing it to make tough decisions on cost-cutting and asset sales. This financial turmoil is a stark contrast to the pre-acquisition stability Morrisons enjoyed, highlighting the often harsh financial realities of private equity ownership.

The increased debt burden post-acquisition is a common theme among PE-owned firms. The strategy often involves leveraging the acquired company’s assets to secure loans, which are then used to pay dividends to the private equity owners and to finance further acquisitions. This can lead to a cycle of increasing debt and financial instability, as seen with Morrisons. The supermarket’s financial health has deteriorated significantly, impacting its ability to compete effectively in the market.

The impact of private equity ownership extends beyond financial instability. For instance, under PE ownership, Morrisons has faced significant operational challenges, including the need to divest assets and implement cost-saving measures that may affect its competitive position in the market. These financial pressures can limit the company’s ability to invest in new technologies and innovations that are critical to staying competitive in the fast-evolving retail sector.

Market Dynamics and Competition:

Asda’s shrinking market share, juxtaposed with Aldi’s rise, paints a vivid picture of the competitive pressures exacerbated by private equity ownership. Aldi’s focus on low-cost, high-efficiency operations has resonated with cost-conscious consumers, eroding the market share of more traditional supermarkets like Asda. This shift in market dynamics underscores the challenges faced by PE-owned supermarkets in adapting to changing consumer preferences and competitive pressures.

The competitive landscape of the UK supermarket sector has been significantly altered by these changes. Asda, under TDR Capital’s ownership, has had to contend with aggressive price competition and shifts in consumer behavior. Aldi’s market share gains reflect a broader trend towards discount retailers, which has been accelerated by economic uncertainties and changes in shopping habits post-pandemic. Asda’s efforts to streamline operations and improve efficiency under PE ownership have been met with mixed results, as the balance between cost-cutting and maintaining service levels proves challenging.

The rise of discount retailers like Aldi and Lidl has intensified the competitive pressures on traditional supermarkets. These discount chains have successfully captured a significant portion of the market by offering lower prices and a streamlined shopping experience. As a result, supermarkets like Asda, which are now under private equity ownership, face the dual challenge of competing with these low-cost operators while also managing the financial and operational demands imposed by their new owners​​.

Under private equity ownership, the strategic focus often shifts towards short-term profitability, which can lead to decisions that are not always aligned with long-term market positioning. For example, cost-cutting measures may involve reducing staff, limiting store refurbishments, and cutting back on product variety. While these steps can improve immediate financial metrics, they risk alienating customers who value service quality and product selection. Consequently, PE-owned supermarkets like Asda must navigate the delicate balance between operational efficiency and customer satisfaction to maintain their competitive edge in a challenging market.

The Future of UK Supermarkets Under Private Equity:

Looking ahead, the sustainability of private equity-owned supermarkets remains a topic of debate. Experts warn of the potential for further financial instability if these firms prioritize short-term gains over long-term health. Regulatory scrutiny may increase as policymakers grapple with the broader implications for the retail sector and consumer welfare. The future of UK supermarkets under private equity control is uncertain, with potential for both positive and negative outcomes.

The focus on short-term profitability can undermine the long-term viability of these businesses. The experience of Morrisons and Asda highlights the delicate balance required to navigate these challenges. Regulatory bodies may need to step in to ensure that the long-term interests of consumers and employees are protected. For example, increasing regulatory oversight on the financial practices of PE-owned firms could help mitigate the risks associated with high leverage and aggressive cost-cutting strategies.

The future of private equity in the UK supermarket sector will likely be shaped by a combination of market dynamics, regulatory interventions, and the strategic decisions made by these firms. As the industry continues to evolve, it will be crucial for PE-owned supermarkets to find ways to balance short-term financial objectives with the need to build sustainable, customer-focused businesses. This balance will be essential for maintaining competitive advantage and ensuring the long-term health of the sector.

As private equity continues to play a significant role in the UK supermarket industry, the lessons learned from Asda and Morrisons will be critical for shaping future strategies. Companies must prioritize sustainable growth, even under the pressure of private equity ownership, to ensure they can meet the demands of a changing market while safeguarding their long-term viability.

The rise of private equity in the UK supermarket sector has brought about significant changes, with both positive and negative implications. While the influx of capital and expertise can drive improvements, the associated financial pressures and strategic shifts can also lead to instability and decline. Asda and Morrisons exemplify the complex dynamics at play, with their experiences offering valuable insights into the broader impact of private equity on the retail industry. The future of these supermarkets, and the sector as a whole, will depend on the ability to balance short-term financial goals with long-term sustainability.

The role of private equity in reshaping UK supermarkets has sparked a broader conversation about the balance between financial engineering and the foundational principles of retailing: quality, service, and community engagement. The ongoing narrative will undoubtedly include more case studies, regulatory reviews, and strategic pivots as the industry seeks to reconcile the often conflicting demands of shareholders and stakeholders. As such, the journey of UK supermarkets under private equity ownership remains a critical area for observation and analysis, influencing not only market dynamics but also the everyday lives of millions of consumers.

[sasbod] 21/6/2024 06:04

Sounds like Sainsbury's are simplifying the business for sale to a venture capital firm no doubt.

[bountyhunter] 20/6/2024 17:56

I've just noticed that there was another golden cross early June, a bit of an oddball one but you never know, it could bode well from here.

[rolo7] 20/6/2024 17:55

Noone wants to be Asda CEO they been looking for 2 years?

[keyno] 20/6/2024 16:53

The "return" to shareholders will be in the form of buybacks, as sure as eggs is eggs........

[loganair] 20/6/2024 13:39

Shore Cap said the deal is "another important stepping stone in the simplification of the Sainsbury business" and the disposal is "at a pace that is faster than we originally anticipated".

The deal "draws to a close an adventure that had lofty ambitions to be a challenger bank that was thwarted by regulators, technocrats and the power of incumbents", said analyst Clive Black.

[loganair] 20/6/2024 11:10

I see there is now only 2.8% difference between Aldi's and ASDA grocery market share here in the UK compared to this time last year when the difference was 3.9% as Asda's sales declined by 4% over the past 12 weeks compared to Aldi's rising by 0.8%, while for Lidl the difference has shrunk from 6.4% to 4.7%.

[philanderer] 20/6/2024 09:23

Indeed..

"...Sainsbury's said it expects its bank arm to return excess capital of at least GBP250 million to the grocer once its phased withdrawal from it has been completed and a future model for Argos Financial Services is in place.

Sainsbury's intends to return this capital to shareholders.

[loganair] 20/6/2024 09:22

I hope this £250m is paid as a one off Special Dividend of 10p + normal dividend, rather then further Share Buy Backs.

[philanderer] 20/6/2024 09:16

The supermarket giant estimates it will return at least £250m in excess capital to shareholders.

[loganair] 20/6/2024 09:05

Sainsbury's will PAY NatWest £125m to take on the bulk of its banking arm...


If this is anywhere near the truth then it's ridiculous. Tesco managed to sell it's banking arm for a considerable amount whereas Sainsbury's are having to pay another bank to take their banking arm off their hands...


Sainsbury's hasn't sold it's banking arm, it has given it away, plus paid money to give it away.

I think CityAM has a much better and more accurate headline - "Sainsbury’s to pay Natwest £125m to take bank division off its hands"

Sainsbury's has been in banking for nearly 3 decades, I wonder how much this has cost Sainsbury's over this time?

[spob] 20/6/2024 08:10

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Sainsbury's to pay Natwest 125 MILLION POUNDS to process toxic waste. Lol

[philanderer] 19/6/2024 08:58

HSBC raises Sainsbury's price target to 325 (310) pence - 'buy'

[dondee] 11/6/2024 11:51

Why is the above post on here?