UK retailer Sainsbury's has posted first quarter results that indicate a 0.8% drop in like-for-like sales (excluding fuel), in the 12 weeks to 4 June, however chief executive Mike Coupe believes the retailer will 'outperform [its] peers' over the remainder of the year.
Here's how leading analysts saw the retailer's Q1 results.
Ray Gaul, VP Research and Analytics, Kantar Retail:
"J Sainsbury plc’s strong first quarter performance is likely to reverse a recent share price falloff. CEO Mike Coupe revealed stronger than expected growth rates for the total business, including a headline growth number of +0.3% excluding fuel. Coupe signalled a desire to begin speaking more about future plans than about current performance in highlighting that general merchandise and clothing categories grew by over five percent. […] Coupe will want to show investors that the new team structure, including Argos, can adapt to the challenges ahead. This new structure will be revealed in stages as the new operating teams are formed."
Bernstein Research:
"Although the like for like sales growth will seem disappointing compared to Morrisons' already reported +0.7%, Morrisons is benefiting from the closure of stores and its total sales growth was ‑1.8%, 210bps behind Sainsbury's +0.3%. […] Sainsbury's has not closed any supermarkets this quarter and opened 7 new convenience stores, still seeing opportunities for its diversified offer. It did close 6 convenience stores in the quarter and this will be a key question for the conference call. Similar to Tesco, they both see in a lot of growth in the channel, but are rationalising some of the underperforming stores in their large store portfolio."
James Collins, Stifel:
"Q1 ex fuel LfL -0.8%, better than the c.-2% suggested by market share data but modestly weaker than Q4’s +0.1%. Management refers to “transaction growth across all channels” and “good sales growth” across clothing (nearly 5% in a weak market) and general merchandise (growth >5%). Market share data suggests that this was not a strong quarter for the grocers and hence we think this is a solid outcome. […] Kantar data suggests that Sainsbury’s has made a far greater commitment to reducing promotional participation than Tesco and Morrisons and that its underlying sales growth of non-promoted items is the strongest of the big four by some way. This suggests a strong customer response to the Value Simplicity programme and a more sustainable sales base."
Barclays European Food Retail Equity Research:
"Overall the sales numbers are certainly better than what we thought Kantar and Nielsen data were suggesting, but they are still less good than Morrison’s +0.7% in 1Q. The company maintained its cautious commentary on the market, although it is not new language."
David Alexander, Senior Analyst at Verdict Retail:
"Not so much back down to earth with a bump, but nevertheless a disappointing start to the year for Sainsbury’s, which has been unable to build on the l-f-l growth momentum it had established in its Q4 2015/16. With Tesco’s l-f-ls having grown by 0.9% in its full year and Morrisons shifting gear with first quarter l-f-l growth of 0.7%, Mike Coupe’s claim that Sainsbury’s continues to outperform its major peers begins to look a little dubious. The buzz word for both Sainsbury’s and indeed, Tesco, seems to be trust. Amid challenging times for British families, the discounters, with their straightforward proposition of limited ranges and reliably low prices have left the big grocers exposed for their more opaque approach to delivering value, marked out by a confusing array of promotions and brand matching."
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