Though the orange supermarket only ended up falling 2.8% across 2017, from a starting price of £2.50 to a close of £2.43, from May’s one year high of £2.80 the stock actually plunged 13%. And its performance in 2018 has been just as turbulent. Sainsbury’s had risen back to £2.60 by the end of January, before pulling below £2.40 during the first half of February’s value-eroding trading.
The supermarket repeated this move between the second half of Feb and the end of March, bouncing to £2.60 before slipping all the way to a 4 month low of £2.25, a decline in part informed by the news that it was increasing staff pay (while cutting paid breaks and annual bonuses). Yet it has seen an astonishing, sustained climb in April, with Sainsbury’s shooting to a 10 month peak, and current trading price, of £2.68.
The company’s last update came in mid-January, when it reported its third quarter figures. For the 15 weeks to 6th January, total retail sales were up a relatively tame 1.2%, but with like-for-like sales rising a slightly more promising 1.1%. Yet CEO Mike Coupe was keen for investors not to get carried away, warning that the supermarket was operating in a ‘challenging market’ thanks to ‘a bit of a squeeze on disposable income’, meaning where customers are ‘able to defer purchases, they do’.
Back in January the supermarket claimed that its full year underlying pre-tax profit would be ‘moderately ahead’ of the £559 million forecast. But it is still likely looking at a year-on-year decline, of around 3.8% at that aforementioned estimate. With UK inflation in retreat, and real wages nearing positive territory for the first time in a year, investors will also want to hear Sainsbury’s outlook for its next financial year.
J Sainsbury (OTC:JSAIY) PLC(LON:SBRY) (LON:SBRY) has a consensus rating of ‘Hold’ alongside an average target price of £2.58.
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