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Sainsbury’s – a squeezed supermarket

04/11/2022
Sainsbury's has announced its half year results

SAINSBURY’S, the UK’s second largest supermarket, has announced its half year results:

  • Like-for-like sales (excluding fuel) down 0.8 per cent, with Q2 up 3.7 per cent after a decline of 4.0 per cent in Q1
  • Retail operating profit down 9 per cent
  • Guidance unchanged: the group continues to expect FY22/23 underlying profit before tax of between £630 million and £690 million

Charlie Huggins, Head of Equities at Wealth Club, commented:

“These are solid enough results from Sainsbury’s, but it is difficult to get excited. It’s just such a tough industry, with fierce competition, fickle consumers and thin margins.

UK grocery shoppers have abundant choice – from premium shops like Waitrose, Ocado and M&S to Asda, Aldi and Lidl at the other end. In the middle is Sainsbury’s. It does its job perfectly well but isn’t perceived as the cheapest or the best. This makes for a tough gig, especially in an inflationary environment.  

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To be fair to Sainsbury’s, it isn’t taking this lying down. It has lowered prices and significantly increased online capacity. But all this comes at a cost. With the economy being strangled by higher interest rates and inflation, Sainsbury’s will have to run very hard just to stand still.”

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