15th March 2016
As Sainsbury’s reports a Q4 trading update Graham Spooner, investment research analyst at The Share Centre, explains what it means for investors…
In a trading update reported this morning, the UK’s third biggest supermarket Sainsbury’s said that like for like sales rose by 0.1% in the three months to 12 March. Albeit this is a small increase, investors should acknowledge that it means the company is returning to sales growth for the first time in two years. The company’s better-than-expected sales figures were helped by a rise in online grocery sales, which were up nearly 14% in the period.
The group expressed confidence on being able to outperform its main peers and that it also stated it remained committed to stopping the majority of its multi-buy promotions for grocery products. Investors should appreciate that in view of all the competition and resulting price wars, we believe the figures reported this morning are encouraging.
Interested investors should note that in this update, there was no news on its offer for Home Retail Group. The company and rival Home Retail suitor, South African group Steinhoff International, have until Friday to make a firm bid or walk away.
The market will eagerly await the group’s annual results in May to see if sales continue in the right direction. At present, Sainsbury’s remains our sector pick in what is set to remain a very competitive market place. We recommend the group as a ‘buy’ for medium risk investors with a balanced portfolio.