30th September 2015
As Sainsbury’s reports its second quarter results, Ian Forrest, investment research analyst at The Share Centre, explains what they mean for investors…
This morning Sainsbury’s reported better than expected Q2 volumes and transaction levels and said underlying profits before tax for the full year should be moderately better than it previously advised. That comes despite continued market challenges and the negative impact of food deflation on profit margins.
Interested investors should be aware however that total sales for the quarter were up 0.3% excluding fuel, while like-for-like sales, excluding fuel, were down 1.1%. Investors should note that a rapidly changing landscape for grocers should be good for shoppers in the long term as the Big Four do what it takes to remain competitive. We therefore continue to recommend Sainsbury’s as a ‘buy’ for contrarian investors as the company leverages its range of shopping channels, diversifies its products and services, and focuses on flexibility and convenience. This is where it has advantages over the likes of Aldi and Lidl. Its strong balance sheet also puts Sainsbury’s in a good position to defend its market share.