10 January 2024
If you are covering Sainsbury’s latest financial results, please find below a comment from Chris Beckett, head of equity research at Quilter Cheviot:
“While headline figures suggest Sainsbury's performed incredibly well, under the surface things look a little more uncertain. Crucially, however, for what is a subscale, low margin business, it is being managed well and is doing a good job in what is an incredibly competitive environment.
“It is fair to say that the supermarket division had a very good Christmas and will cheer sales rising by over 8 percent during the festive period compared to last year. While price rises haven’t been quite as severe as earlier in the year, the business appears to have been able to offset that benefit disappearing by increasing volume growth and claim it has taken market share from competitors. Given it is the first of the retailers to report, we will see if that has truly been the case or if it has simply just been a bumper Christmas all round.
“The consumer discretionary side of the business is still under pressure, with Argos and its non-food divisions continuing to struggle where consumers are cutting back on non-essential purchases. The worst of the cost of living crisis is behind us so it will be crucial to watch this in 2024 to see if any sort of recovery takes place.
“For investors, there remains better run businesses with proper scale that allows them to succeed in an ultra-competitive market, such as Tesco. But as a barometer for the Christmas period, Sainsbury’s is indicating it could be a good one all round.”
