Sainsbury's a 'buy' after third quarter beat, says Societe Generale
Sainsbury’s third quarter highlights the group’s compelling strategy and differentiation from the other 'Big Four' supermarkets, Societe Generale said on Wednesday.
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The company’s like-for-like (LFL) retail sales were down 0.4% over the festive third quarter but by less than the 0.7% forecast, leading the grocer to say that the second half as a whole is likely to be better than the first.
The supermarket, which is continuing to mull a bid for Home Retail after a November offer was rejected, lifted total retail sales 0.8% excluding fuel, as its new simpler pricing strategy of lower regular prices and reduced levels of vouchering and promotional participation helped grow transactions and volumes.
“The group benefitted from a more transparent pricing policy, with fewer promotions/multi-buys and a stronger focus on ‘low’,” said Societe Generale analyst Arnaud Joly.
Societe Generale gave Sainsbury’s a ‘buy’ rating and a target price of 315p.
Shares fell 0.34% to 250.35p at 1226 GMT.