Sainsbury reported decent results in Q2. However, we see incremental top-line pressure (-20bp market share according to Kantar) due to the onslaught from German discounters, a fitter Tesco and Asda, and eroding real wages/discretionary demand. The cost savings are estimated to be reinvested to ward-off competitive pressure and, hence, margins are forecast to be flat going forward. Our recommendation is reset downwards to ‘Add’.
19 Dec 2017
Results in line with expectations; intensifying competition a big worry
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Results in line with expectations; intensifying competition a big worry
J Sainsbury plc (SBRY:LON) | 259 -9.8 (-1.4%) | Mkt Cap: 6,153m
- Published:
19 Dec 2017 -
Author:
Nishant Choudhary -
Pages:
4
Sainsbury reported decent results in Q2. However, we see incremental top-line pressure (-20bp market share according to Kantar) due to the onslaught from German discounters, a fitter Tesco and Asda, and eroding real wages/discretionary demand. The cost savings are estimated to be reinvested to ward-off competitive pressure and, hence, margins are forecast to be flat going forward. Our recommendation is reset downwards to ‘Add’.