JSNSF - Sainsbury's: Third Quarter Trading Statement - A Mixed Bag Of Groceries And General Merchandise
2025-01-15 08:08:38 ET
Summary
- Sainsbury’s grocery business has performed well, gaining market share for the fifth Christmas in a row.
- Leading customer satisfaction and record product availability metrics point to consistent strong operational execution.
- General merchandise sales continue to struggle and conditions look set to remain problematic for Argos and peers going in to FY26E.
- Labor cost pressures driven by the UK October 2024 Budget changes represent a headwind for the FY26E profit margin and will probably contribute to further grocery price inflation.
- Sainsbury’s continues to look cheap on valuation grounds, and with a dividend yield above 5% I am happy to maintain a Buy rating on the UK’s second largest supermarket group.