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Last year was the final year of Sainsbury's recovery plan - dubbed 'Making Sainsbury Great Again' - and chief executive Justin King appears to have every reason to be satisfied with the group's performance.
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Like-for-like sales (excluding fuel) grew by 3.9 per cent last year, after rising for 13 consecutive quarters. And Mr King was keen to highlight that trading remained strong during the last quarter despite a deteriorating consumer environment as the group increased promotions, which included the 'feed your family for a fiver' initiative.
But the goal is now to return the group to growth with an increased exposure to non-food products. The supermarket aims to generate a third of its revenue from products such as clothing, entertainment and electrical goods. The company has already dipped a toe in the clothing market with its TU brand - which generated £300m of sales last year - and it is now launching a homeware range called TU Home.
Broker Citigroup forecasts a full year EPS of 22.1p, rising to 24.9 the following year.
J Sainsbury (SBRY) |
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|---|---|---|---|---|
| ORD PRICE: | 375p | MARKET VALUE: | £6,553.5m | |
| TOUCH: | 375-376p | 12-MONTH HIGH: | 594p | LOW: 317p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 282p | NET DEBT: | 30% | |
| Year to 22 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2004 | 17.10 | 610 | 20.7 | 15.69 |
| 2005 | 15.20 | -187 | -17.4 | 7.80 |
| 2006 | 16.10 | 58.0 | 3.80 | 8.00 |
| 2007 | 17.15 | 477 | 19.2 | 9.75 |
| 2008 | 17.84 | 479 | 19.1 | 12.00 |
| % change | +4 | - | -1 | +23 |
Ex-div: 21 May Payment: 18 Jul |
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Reflecting speculation that Delta 2 - the Qatari-backed investment fund - might make a further takeover attempt, the shares have had a decent run in recent weeks. They now trade on a not-so-cheap looking 17 time forecast full-year earnings which, in the absence of a bid, looks fairly priced.
Last IC view: Fairly Priced, 26 Mar 2008, at 358p
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
