As US delivery company Postmates enters the grocery market with its new Fresh service in North America, even the great and mighty Amazon (US:AMZ) is worried. But it’s fair to say that it’s still the latter’s Prime one-hour delivery service that has sent shockwaves through the British grocery sector. Traditional supermarkets such as J Sainsbury (SBRY) are scrambling to maintain their market share, so it’s encouraging to see the company isn’t doing too badly online. Sales there grew 7.2 per cent during the first half, although it’s worth pointing out that sales across the convenience estate also grew by 8.2 per cent.
Like-for-like sales across the entire group rose by 1.6 per cent, but there was a considerable slowdown in sales growth during the second quarter. Total group sales rose by 17 per cent, but this was mainly down to the Argos acquisition. Although synergies from that deal appear to be on track, analysts reckon the group needs to report a consistently solid top-line performance to reap the full rewards. As far as other cost savings go, the group managed to claw back £100m during the first half. Management now expects to deliver savings totalling £540m during the three years to March, ahead of the £500m targeted.
Analysts at Shore Capital expect pre-tax profit of £585m (£581m in FY2017) for the year ending March 2018, giving EPS of 19p.
| J SAINSBURY (SBRY) | ||||
| ORD PRICE: | 229p | MARKET VALUE: | £5.02bn | |
| TOUCH: | 228.8-229p | 12-MONTH HIGH: | 284p | LOW: 224p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 294p | NET DEBT: | 20% | |
| Half-year to 23 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 12.6 | 372 | 14.8 | 3.6 |
| 2017 | 14.6 | 220 | 7.1 | 3.1 |
| % change | +16 | -41 | -52 | -14 |
| Ex-div: | 16 Nov | |||
| Payment: | 02 Jan |
