PREVIEW: What’s in store for Sainsbury's?

Sainsbury's is the next of the 'Big Four' supermarkets to reveal its financial results.

Shopper coming out of Sainsbury with bags of groceries.
Like for like sales are expected to have been higher in the second half.

J Sainsbury Plc’s (LON:SBRY) will be under the microscope on Wednesday, as it releases full year results and traders will be keen to see how the figures compare with its peer group, otherwise known as the "Big Four".

Expectations are relatively high, given the upbeat figures for the third quarter (for the 15 weeks to January 9) which showed good trading over Christmas.

The supermarket, at that time, said it expected like for-like sales in the second half to be better than the first.

"Food deflation and pressures on pricing will ensure that the market remains challenging for the foreseeable future," said Mike Coupe, chief executive.

All the big UK supermarkets have faced well-documented difficulty competing against discounters like Aldi, and traders will be keen to see how Sainsbury is doing on that front.

Arnaud Joly, analyst at Societe Generale, is expecting Sainsbury to report £675mln of earnings on £23.5bn of revenue.

“In a tough context (deflation, sector cost inflation of 2%), the group should show a flexible cost structure and an efficient pricing/marketing policy,” the analyst said.

“In all, we expect underlying PBT of £613m and a total dividend of 11.4p (consistent with consensus of 11.1p).”

He added: “We expect management to target slightly positive LFL sales growth, excluding petrol, and a stable EBIT margin (which seems consistent with the current consensus expectations).

“We do not expect much more colour on the Home Retail Group acquisition (at least £160m of synergies already announced by management).”

Credit Suisse has a ‘hold’ rating for Sainsbury, and a 260p price target.

Wednesday's Trading Announcements

Carillion (LON:CLLN), Direct Line Insurance Group Plc (LON:DLG), Glencore Plc (LON:GLEN), Intu Properties Plc (LON:INTU), Next Plc (LON:NXT), Paddy Power Betfair plc (LON:PPB), Virgin Money Holdings Plc (LON:VM., JD Wetherspoon (LON:JDW), Randgold Resources Limited (LON:RRS), Royal Dutch Shell (LON:RDSB), Xtract Resources (LON:XTR).

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