Sainsbury's Earnings Miss Is A Bad Portent For Grocers

[OnlyMe]

Considering the inflation that is flowing trhough their prices this is not a good set of sales results.

Still, unexpected. I've unexpectedly been goingto Lidls a lot more.

http://online.wsj.com/article/BT-CO-20110323-703133.html

Sainsbury's Earnings Miss Is A Bad Portent For Grocers

By Kathy Gordon

Of DOW JONES NEWSWIRES

LONDON (Dow Jones)-- The top-performing U.K. supermarket, J Sainsbury PLC, failed to meet market expectations in its most recent quarter Wednesday, auguring badly for a retail sector which is already under pressure from a sub-zero Christmas and a poor and cautious consumer.

The news pushed Sainsbury shares down almost 6% in early trade, and also dragged down supermarket peers Tesco PLC (TSCO,LN), down 2.53% at 369 pence, Wm. Morrison Supermarkets PLC (MRW.LN), down 0.62% at 275 pence, and online grocer Ocado PLC (OCDO.LN), down 1.50% at 210 pence.

Chief Executive Justin King sounded a familiar note of caution, echoing the 'tough' consumer environment described by retail executives across the U.K. as tax rises, job cuts and rising inflation chip away at shoppers' disposable income.

[Democorruptcy]

Considering the inflation that is flowing trhough their prices this is not a good set of sales results.

Still, unexpected. I've unexpectedly been goingto Lidls a lot more.

http://online.wsj.com/article/BT-CO-20110323-703133.html

Sainsbury's Earnings Miss Is A Bad Portent For Grocers

By Kathy Gordon

Of DOW JONES NEWSWIRES

LONDON (Dow Jones)-- The top-performing U.K. supermarket, J Sainsbury PLC, failed to meet market expectations in its most recent quarter Wednesday, auguring badly for a retail sector which is already under pressure from a sub-zero Christmas and a poor and cautious consumer.

The news pushed Sainsbury shares down almost 6% in early trade, and also dragged down supermarket peers Tesco PLC (TSCO,LN), down 2.53% at 369 pence, Wm. Morrison Supermarkets PLC (MRW.LN), down 0.62% at 275 pence, and online grocer Ocado PLC (OCDO.LN), down 1.50% at 210 pence.

Chief Executive Justin King sounded a familiar note of caution, echoing the 'tough' consumer environment described by retail executives across the U.K. as tax rises, job cuts and rising inflation chip away at shoppers' disposable income.

Justin King must be really worried and having sleepless nights about this - NOT

Sainsburys 2009 to 2010

Justin King £2,048,000 to £3,348,000 (+63%)

Mike Coupe £937,000 to £1,407,000 (+50%)

Darren Shapland £967,000 to £1,542,000 (59%)

http://www.j-sainsbury.co.uk/ar10/downloads/pdf/Sainsburys_AR10_Full.pdf

Plus share options where the real money is made?

We are seeing price inflation to feed top level pay inflation.

[mikthe20]

Higher input costs have to erode either margins and/or spending here. Either prices go up and less is bought, or margin is destroyed. Shouldn't really come as a surprise.

+1 Margin destruction is being terribly ignored by the financial media. I expect stockmarkets to wake up to this eventually, but probably not until year ends in the US.

[General Congreve]

Traditionally food retailers are seen as the last bastion of profitable business in a poorly performing economy. However, all the big supermarkets have spread their tentacles into many other markets, such as clothing, mobile phones, consumer goods etc. which hard pressed consumers are buying less of. Hence I am not surprised that Sainsburys are not performing as well as expected.

[The Preacherman]

Sounds like finally the supermarkets markets have saturated the market any stores that are now built are chipping away at sales from their existing stores.

These figures are starting to show the impact of the perfect storm on the sector. Consumers under pressure, rising inflation and excess capacity are resulting in poor like for like sales. many have been in denial about new capacity – but JS has added 8.5% more space, Tesco will have added c6.5% and Morrisons has just substantially increased its opening plans. In fact, Tesco and Sainsbury between themselves are opening more space than there is growth across the entire industry. But with the consumer facing falling disposable income, sales are being spread more thinly – hence the underlying negative LFL sales. The UK has never seen sustained negative LFL sales across the industry before, but economics and mathematics suggest that this will be the new norm for the foreseeable future. There is not enough soft market share left with weaker players to feed the ambitions of the Big 4. Remember that outside the Big 4 we also have aggressive expansion by others like Waitrose, Aldi, Lidl etc.

http://ftalphaville.ft.com/blog/2011/03/23/524356/tasting-the-difference-at-sainsbury/

Add in the increasing desire to source produce direct from quality independent producers and that rising fuel costs hurt their hub distribution model perhaps the big 4 supermarkets have finally reached their peak.

[r.bartlett]

Being dragged round Tesco recently on a Sat early afternoon on several occasions I am amazed how quiet it is these days and how many offers are in store.I can't believe they can hit targets this year unless they are factoring in non groceries such as insurance etc

[billybong]

As if they haven't got enough stores Sainsbury's are increasing the size of the existing ones again. Increasing them in size to the extent that marathon athletes will certainly be seen walking along the aisles as more than enough excercise to get super fit for the Olympics - and despite all the efficiency through scale the likes of Lidl are still competitive.

Edited March 23, 2011 by billybong

[The Preacherman]

I would also go so far to say I probably save 40% less when shopping in Aldi compared to Waitrose, Tesco or Sainsburys when equivalent products. One such example, Early Grey Tea, 99p in Aldi, cheapest in Tesco is £1.40!

And the products taste 50% cheaper as well.

[winkie]

These big supermarkets keep expanding, opening new stores.....but there is only so much cash to go round to spend on food.......clothes. electrical gadgets. homewear.etc.......We have the top end, who cater to specific customers, they will do well............the lower (newer) end that still provide quality food provided by not so well known brands, with good local fresh produce having the pack it high sell it low way of looking at it..most people love the thought of a bargain without the added extras, some now have little choice........then you have the middle that have put on a lot of weight recently, all in competition with each other for the best spots in the high street and beyond, the all things to all people....they will be the ones that will feel the squeeze the most.imo.

[Shrink Proof]

In this article in today's Independent Sainsbury's Chief Executive, Justin King, warns of a "sudden downturn" in consumer spending. Better still, he says that they've noticed that " people are waiting to get paid before deciding how much to spend". The idea that for ages they weren't doing this and that that was considered normal shows just how screwed up "normality" has got.

[KING5TON]

Load of crap

Supermarket's fleecing the UK

[OnlyMe]

Load of crap

Supermarket's fleecing the UK

Don't buy from Uk supermarkets.

Lidl and Aldi are very good for what they do.

[KING5TON]

Don't buy from Uk supermarkets.

Lidl and Aldi are very good for what they do.

Yeah, well I'm a lazy bugger and Asda in on my route home from work.

Plus Lidi and Aldi are full of pikeys and poor people

I was just pointing out that Sainsbury's can shut their freaking mouths.

They're bum raping us on the cost of food compared to other countries and have the gall to whine about lost earnings.

Cry me a freaking river

[exiges]

Plus Lidi and Aldi are full of pikeys and poor people

Don't be so judgemental, those with money are often the most careful with it.. and those most profligate don't have any.

[OnlyMe]

Yeah, well I'm a lazy bugger and Asda in on my route home from work.

Plus Lidi and Aldi are full of pikeys and poor people

I was just pointing out that Sainsbury's can shut their freaking mouths.

They're bum raping us on the cost of food compared to other countries and have the gall to whine about lost earnings.

Cry me a freaking river

I've done a food shop at asda once and only once, quite a few of the items in that shop I was genuinely taken aback by their poor quality.

[yellerkat]

Yeah, well I'm a lazy bugger and Asda in on my route home from work.

Plus Lidi and Aldi are full of pikeys and poor people

Our local LIDL is far less chavvy than ASDA Brighton Marina, which is stuffed with the most appalling anti-food rubbish. You have to dig deep to find any real food.

[KING5TON]

I was joking guys hence the

[OnlyMe]

I was joking guys hence the

Oh you meant us.

[saving since 2005]

I get my cados from lidl, they are 2/3 cheaper than waitrose and come in all funny shapes indicating they throw away less for purely cosmetic reasons. The ones in waitrose are all uniform and identical - prob means they throw away 2/3 that just dont look right.

[Superted187]

I'm really bored of hearing about the snow being blamed for just about everything.

If it snows, I do actually still need to eat.

[winkie]

I've done a food shop at asda once and only once, quite a few of the items in that shop I was genuinely taken aback by their poor quality.

...out of interest give an example of the type of food that was poor quality.

[winkie]

Cant comment about Lidl, but I would suggest you see for yourself and thats coming from a fussy waitrose shopper.

I will say there is a certain amount of food snobbery in this country, some friends of mine fall into that category, will only shop in Marks or Waitrose and then they wonder why they are so in debt???

Some things I do steer clear of though, but its about spotting the value for money above all else.

....I find it helpful if you dress a certain way depending on where you choose to do your shop that day...best to blend in with the crowd you think you will bump into...if you can change your way of speaking so much the better.....

[billybong]

Mr King pulled no punches in describing how quickly shoppers had reined in spending. He said: "The surprise is just how sudden that [change has come]. People have come out of Christmas and said: 'Right, now I am going to have to approach this different[ly].' People are waiting to get paid before deciding how much to spend." The impact of record petrol prices was seen in Sainsbury's total sales jumping by 6.8 per cent in the fourth quarter, but by only 3.5 per cent when fuel was excluded.

That sounds as if people have cut right back but their weekly shop is still more expensive because of the huge price inflations.

Mr King said shoppers putting one less item in their weekly shopping basket might not seem much in terms of the £151bn UK grocery sector, but he emphasised the speed of change. He said: "It is a very big step. That would historically take years but that has happened almost overnight [since] Christmas.

That's what people do when they being so obviously and blatantly price and taxation gouged at every turn. Likely in time they'll even be putting two less items in the basket - maybe even three or more .

[Sancho Panza]

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11132532/Sainsburys-warns-sales-will-continue-to-fall.html

'J Sainsbury, Britain's third largest food retailer, has reported a 2.8pc drop in like-for-like sales and warned that sales will continue to fall sharply for the rest of the year.

Sainsbury's had initially forecast flat sales for its financial year to the end of March, but now faces a significant drop in sales as the rise of the discounters Aldi and Lidl and a price war takes its toll on retailers.

Mike Coupe, chief executive, said the grocery market "remains dynamic and fiercely competitive".

Sainsbury's said that like-for-like sales fell by 2.8pc excluding fuel in the 16 weeks to September 27 and 4.1pc including fuel. For the half-year, like-for-like sales dropped by 2.1pc.'

[The Masked Tulip]

So the SP will continue to fall as will that of TSCO and MRW. I suppose they first one to be bounce will the one reporting a slowing of the fall in sales.

Expecting sales to fall through to end of year in March eh.