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Sainsbury’s clears a tough hurdle

by LLB Editor
6th Jul 21 2:06 pm

Sainsbury’s faced an extremely hard act to follow in the past three months compared with a year ago when many people were panic buying in the early stages of the pandemic.

This makes it all the more impressive that the company has managed to chalk up growth for the period and confirms the attractions of a UK groceries space which was recently reflected in the multi-billion-pound bid for Morrisons.

“Sainsbury’s, which has itself previously been the subject of bid interest, may again be drawing covetous glances based on its recent performance, with a slight decline for Argos as it loses the one-off benefit of people shopping for home working equipment the only real fly in the ointment,” said AJ Bell’s Russ Mould.

“The pandemic has clearly helped accelerate a shift towards ordering groceries online and many people are sticking with this way of doing the weekly shop due to the convenience factor.

“Having ramped up capacity to deal with a short-term surge in demand, Sainsbury’s is now benefitting from economies of scale in this part of the business, as well as increasing the range of services to meet through its Chop Chop rapid delivery service and partnerships with Deliveroo and Uber Eats.

“The company is not resting on its laurels either, taking the fight to discounters Aldi and Lidl with a series of price cuts.

“A year into his tenure and chief executive Simon Thomas is sitting relatively pretty but the supermarkets space is an extremely competitive and demanding one so there is no room for complacency, particularly given the uncertainty over the direction Morrisons will take under its new ownership.”

 

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