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Sainsbury’s preliminary FY21/22 results were in line with the street expectations. The lfl sales came in at -2.3% yoy, as the positive momentum in clothing was offset by weakness in grocery and general merchandise. Management’s profit guidance for FY22/23 is weaker than the consensus. We expect the retailer to continue with the cost savings plan and reinvest a portion to remain competitive, especially among the big four players. We will be trimming our FY22/23 estimates.
Companies: J Sainsbury plc
Sainsbury’s posted a strong trading performance in Q3 plus Christmas period. The company managed to improve its volume-based market share in the grocery segment. The ongoing cost cutting plan and reduced promotional activity in other segments has prompted the management to improve the outlook for FY21/22 (underlying PBT of at least £720m; +60m vs previous guidance). While the coming quarters should witness higher inflation, pandemic-led demand is also likely to normalize. We maintain our positi
Sainsbury’s trading performance for Q1 FY21 was ahead of our expectations. The momentum was led by grocery and general merchandise segments. As positive developments, the grocer managed to gain market share and also improved the annual profit guidance. Although the H2 FY21 performance is likely to be softer due to tough comparables, the business should be able to achieve its mid-term targets of a 200bp increase in profitability and FCF of £500m. We will increase the target price.
Sainsbury’s Q3 FY20/21 trading performance was slightly ahead of our estimates. Lfl sales improved 8.6% (ex-fuel), with the Christmas period particularly strong with 9.3% growth. On a positive note, management expects underlying profit before tax of at least £330m for FY20/21 (vs market consensus of £275m). The grocer’s success in gaining market share is a step in the right direction. However, further steps are required to improve the pricing and perception.
Sainsbury’s performance during the Q3 and Christmas period was in line with our estimates. The resilience of the food business was comforting but weakness in GM (especially in toys and gaming) was a spoilsport. Online continues to gain strength and management’s plan to increase its contribution to 30% in the mid-term (vs c.20% today) is a step in the right direction. We will tweak our estimates slightly upwards.
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