Here’s what the analysts said
The supermarket chain Sainsbury’s has posted a drop in their profits of more than 8 per cent Wednesday for their full-year results, and their share price is suffering.
Analysts are worried that Sainsbury’s has lost sight of their core business model as a food retailer as Argos has boosted sales.
Shore Capital analysts said: “Our apprehension has proved correct as the business makes less relative progress than has been the case in recent years against an improved competitor set, so now losing market share.”
“The group may be going well in clothing and general merchandise but within the core food element of the supermarket estate it is struggling to build sales.”
“Whilst this is so, Argos is going well for Sainsbury’s, which is very pleasing indeed, whilst the Bank, which is in a reasonably aggressive lending phase, reported a small beat to our forecasts.”
Neil Wilson from ETX Capital said that Sainsbury’s report was “not a great set of numbers” and the concern is that their performance is 0.6 per cent drop in like-for-like sales.
“Investors will hope this slowdown will morph into sales growth but the outlook is challenging.”
“Sainsbury’s sales are declining and it is losing market share. That’s a reflection of the performance of key rivals – Sainsbury’s did very well when Tesco was on its knees but is now facing its own challenges.”
“In particular, as Tesco grows sales again it’s coming at the expense of Sainsbury’s.”