Sainsbury's (SBRY) half-year results surpassed market expectations, with underlying pre-tax profits growing 7 per cent to £400m, compared with consensus estimates of £394m.
This was driven by a 1.4 per cent rise in like-for-like sales (including VAT, but stripping out fuel), helped by strong sales of Sainsbury's own-brand ranges, which are growing at more than twice the rate of branded goods, a 15 per cent rise in online sales and the fast-growing general merchandise division. The underlying operating margin improved by six basis points, too, while the grocer made cost savings of £55m and is set to meet its £100m savings target for the full year. Management hasn't changed full-year guidance of 1 to 1.5 per cent underlying sales growth, despite facing tough comparatives in the final quarter.
Store expansion continued and convenience stores, where sales grew by more than 20 per cent in the period, will outnumber supermarkets by the year-end. Elsewhere in the business, Sainsbury's is developing new income streams, including a mobile phone network and a video on-demand service.
Panmure Gordon has upgraded full-year EPS forecasts from 29.1p to 32.6p, and fiscal 2015 estimates from 31.2p to 35p (from 30.2p in 2013).
| J SAINSBURY (SBRY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 407p | MARKET VALUE: | £7.74bn | |
| TOUCH: | 406-407p | 12-MONTH HIGH: | 409p | LOW: 320p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 303p | NET DEBT: | 38% | |
| Half-year to 28 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 12.2 | 397 | 16.5 | 4.8 |
| 2013 | 12.7 | 433 | 17.9 | 5.0 |
| % change | +4 | +9 | +8 | +4 |
Ex-div: 20 Nov Payment: 3 Jan | ||||
