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J Sainsbury results to reflect market share gains, says broker

Published 19/04/2024, 11:57
© Reuters.  J Sainsbury results to reflect market share gains, says broker

Proactive Investors - J Sainsbury PLC (LON:SBRY) announced 1,500 jobs were going in February as part of a £1 billion cost-cutting programme unveiled on a strategy day.

As part of the three-year plan, the supermarket added it wants to grow food volumes ahead of the market and improve customer satisfaction.

ShoreCap notes that Sainsbury has already been exceptionally effective in the UK grocery arena in recent years, gaining volume share and reflecting the Food First strategy created by CEO, Simon Roberts.

“That strategy sees the firm expand its food footprint in the next three years within the existing asset base, so creating the basis for improved capital returns, which we like.”

“At the same time, Sainsbury is seeking to fulfil the potential of Argos and its wider non-food assortment, noting a wind-down of the Bank to come, sustain a strong balance sheet.”

In March, the house broker said it believed trading through the final quarter of the fiscal year had been strong, with continued outperformance relative to peers and further market share gains.

Grocery sales are forecast to have grown by 8.4% in the second half of the year with clean profits of £695m, at the top end of management guidance.

That implies a retail profit [EBIT] contribution of £969m (+4.6%) and a full-year EBIT margin of 3.0%, the broker added.

ShoreCap also sees recurring buybacks being on the cards without any accretive M&A.

Annual results are due on 25 April (Thursday).

Read more on Proactive Investors UK


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