City lookahead: Analysts forecasting drop in sales at Sainsbury’s
Sainsbury’s is expected to reveal a dip in sales when it posts its quarterly results later this week, as a spell of poor weather and an increasingly competitive retail market weighs on the supermarket giant.
The grocery chain is forecasted to post no improvement in its sales on Wednesday, underlining the firm’s current challenges in the wake of its botched tie-up with rival Asda.
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Analysts at Barclays forecast sales over the first quarter to have fallen by 0.5 per cent for grocery, by 1.5 per cent for general merchandise and by 2.5 per cent for clothing, implying a total sales decline of 0.8 per cent, or equivalent to around 1.4 per cent on a like-for-like basis.
On Wednesday under-fire chief executive Mike Coupe will be announcing the firm’s first quarter trading statement, with analysts expecting further guidance as to the company’s future after its attempts to merge with Asda were blocked by Britain’s competition watchdog last month.
“Unfortunately, we think it’s likely sales will dip,” said George Salmon, equity analyst at Hargreaves Lansdown.
Salmon added: “With quarter one last year boosted by the football World Cup and a Royal Wedding, Sainsbury is up against a tough comparison – and that’s before we think about how the miserable weather has dampened sales.”
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At the beginning of May Sainsbury’s posted a 7.8 per cent rise in underlying annual profits, but revealed that it had also spent £46m on preparations for its botched merger.
Russ Mould, investment director at AJ Bell, said: “Sainsbury’s full-year results back in May did little to please. Even though underlying profits rose, debt fell and the dividend was held (after a run of three straight cuts to the full-year pay-out) and investors focused instead on the weak sales numbers.”
Over the course of the last year shares in the group have plunged from roughly 317p to just under 200p.