A share tip circled in a newspaper share listing

How bright is the outlook for J Sainsbury plc?

A share tip circled in a newspaper share listingUnder the leadership of Justin King, J Sainsbury plc (LON:SBRY) built an enviable reputation for outperforming its peers, thanks to 36 consecutive quarters of like-for-like sales growth.

That era is now officially over, but I’m not sure the firm’s management really believe it.

Despite last week’s interims being dominated by a strategy shift involving a hefty dividend cut, a £600m+ property impairment and the admission that 1-in-4 of its stores are a little too large, Mike Coupe and his colleagues seem to believe that they won’t face the same level of competitive pressure as Tesco and Morrisons.

Chief executive Mike Coupe’s position seems to be that by continuing to aim upmarket, Sainsbury can get away with more targeted price cuts than its peers — i.e. it will remain slightly more expensive, as it is currently, in my view as a regular shopper at Sainsbury, Tesco.

I’ve other concerns too — but to find out more and decide for yourself, have a read of my latest Motley Fool article, in which I take a closer look at the issues above, and at some of Sainsbury’s latest financials.

You can read the full article here.

Disclosure: This article is provided for information only and is not intended as investment advice. The author owns shares in Tesco and Wm. Morrison Supermarkets. Do your own research or seek qualified professional advice before making any trading decisions.

1 thought on “How bright is the outlook for J Sainsbury plc?

  1. M from There's Value

    I don’t find Sainsbury’s more expensive than anywhere… In fact, we recently did a self-imposed ‘cut your grocery bill in half’ challenge, where we meal planned everything and shopped once a week for all the food. Every week’s list was put through mysupermarket.co.uk and Sainsbury’s came out cheapest *every* time. We blogged about our experiences for 4 weeks, but actually did the challenge for 8 weeks…

    In terms of investing though, I think the greatest problems for Sainsbury’s are the enormous pension obligations and the new wage rises. They need to concentrate on bringing in more upmarket stuff in addition to the Netto adventure. None of the big players will be able to compete with Aldi or Lidl, but i believe Sainsbury’s could easily claw some customers away from Waitrose.


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