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Sancho Panza

Sainsbury’S To Cut Stores And Dividend

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Telegraph 10/11/14

'J Sainsbury is to scrap a giant programme of store openings and slash its dividend, as part of a dramatic overhaul drawn up to fight falling sales.

The supermarket giant will this week unveil the results of a strategic review, which is expected to reveal that Sainsbury’s is reining in costs in an effort to save cash and shore up its balance sheet.

Sainsbury’s sales are falling for the first time in decade as Britain’s “big four” grocery retailers fight shifts in shopping habits and the rise of the discounters Aldi and Lidl.

Mr Coupe replaced Justin King in July and told the City last month that he was conducting a strategic review. He will present the results of the review alongside the company’s interim results, which the City expects to show a 12.5pc fall in underlying pre-tax profits to £350m.

There has been speculation in the City that Sainsbury’s could launch a rights issue to fund a new strategy, but the company is understood to have ruled this out. Instead, it is likely to protect its balance sheet against falling profits by cutting the dividend, potentially by as much as a third.

It is understood that Mr Coupe will also slash capital expenditure and Sainsbury’s new store openings. Sales in large out-of-town supermarkets are falling and Sainsbury’s wants to focus on opening smaller convenience stores.

John Kershaw, analyst at Exane BNP Paribas, said that Sainsbury’s might cut the amount of space it opens by a third. He expected Sainsbury’s to open less than 500,000 sq ft of new selling space in the next financial year, down from 750,000 sq ft this year.

If the company mothballs sites earmarked for new supermarkets then it might be forced to writedown the value of land on its balance sheet.

Clive Black, an analyst at Shore Capital, said Sainsbury’s might cut capital expenditure from just below £900m this year to between £550m and £600m in future.

Mr Black said: “We expect Sainsbury’s to join Asda and Morrisons in becoming more in touch with its customers through a re-allocation of resources from a lower cost base with constrained capital outflows and potentially lower dividend flows.

“For now, as is the case at Tesco, we suspect customers must take precedent over shareholders and other stakeholders in the food system.”

Allan Leighton, the former boss of Asda, said the main problem facing Britain’s grocery retailers was that they have too many stores.

Mr Leighton, who led a turnaround of Asda in the 1990s alongside Archie Norman, said: “In the end, they have too many stores. I think there is a structural thing, but there are also too many stores.”

Tesco’s market share peaked in 2007, but since then it has expanded its shop space by the same area as the whole of Morrisons today.

Mr Leighton also questioned the product range in the big four supermarkets, saying it had become too large and made it “harder to shop”.

He was speaking in an interview as chairman of Matalan, which is growing its out-of-town business but has also opened its first high street store in Cardiff.

Mr Leighton dismissed comments from the supermarket industry that shoppers were turning against out-of-town shopping. He added: “Out of town is very strong.”'

The slow implosion in big retail continues.

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Sainsburys is looking very expensive nowadays. My local main store is very quiet most days of the week. Seems to have a small but sizeable hardcore of Fri and Sat morning shoppers though - they obviously have not spotted the Lidl across the road.

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Sainsburys is looking very expensive nowadays. My local main store is very quiet most days of the week. Seems to have a small but sizeable hardcore of Fri and Sat morning shoppers though - they obviously have not spotted the Lidl across the road.

I go to all supermarkets, but Aldi and Lidl are vastly over rated imho, if you were to buy the own brand stuff from the major Supermarkets itd be a similar price.

The meat they sell is worse than Tesco which takes some doing, and their fruit is more often then not extremely tasteless though is cheaper.

.

Edited by Corruption

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I'm a recent Tesco to Sainsburys convertor. There are no Aldi or Lidls near us. The bread and meat products are vastly better than Tesco but it always seems quiet.

I've used Lidl/Aldi whilst abroad and on holiday in the UK and think they are good if you go with an open mind of what to buy but poor if you have specific (unusual) things you want to buy.

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I go to all supermarkets, but Aldi and Lidl are vastly over rated imho, if you were to buy the own brand stuff from the major Supermarkets itd be a similar price.

The meat they sell is worse than Tesco which takes some doing, and their fruit is more often then not extremely tasteless though is cheaper.

.

On Sat The Mail was reporting that the meat in Aldi was better than meat in other supermarkets including, IIRC, Waitrose.

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We've started getting the main weekly shopping delivered for £1 from an Asda about 5 miles away as it takes the hassle and cost of driving there and back plus at least 1 hour of our time as our previous shop is saved and all waiting in our online basket. We did shop for several years at our local Aldi / Lidl stores when we could but never been loyal to any one supermarket however I think the prices at the so called discounters have crept up over the last 12 months to a point that we feel the quality and prices at Asda were close enough that making use of online shopping was more beneficial to our family of 5.

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They are telling us that it is because we are changing our shopping habits.....well not exactly, it is because they keep opening new stores everywhere but people are not eating more and they certainly do not have extra money in their pockets to spend in all these new food outlets.....anyway, everyone I talk to seems to be on a diet lately, and more people are making and cooking food from scratch from basic ingredients, healthily and more cheaply not to mention trying to grow more of their own food to eat...... ;)

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Aldis are selling 30 day mature scotch beef steaks which I rate better than all other supermarkets. As a proper carnivore I find most super market meats inedible and usually shop at specialist butchers. I eat my steaks rare/blue which is always a proper test. I just gave the aldis ones a go because they had a good "look" to them and was very surprised. I recommend them.

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Another LIDLI shopper here, with a top up at tescos/sainsburys (the only choices here).

I've been really surprised by sainsburys recently. Their prices seem to have been cut dramatically, I am now using them as my second shop after LIDL and have almost dropped tescos completely.

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Another LIDLI shopper here, with a top up at tescos/sainsburys (the only choices here).

I've been really surprised by sainsburys recently. Their prices seem to have been cut dramatically, I am now using them as my second shop after LIDL and have almost dropped tescos completely.

I am sure with their big club card data base they can tell who has dropped them and who has not....high chance having dropped them they will send a nice money off/saving token......would you be tempted? ;)

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Sainsbury was seeing cash outflows from the last accounts so they have no choice but to cut capital spending and the divi.I really cant see why anyone shops there.The prices are way way higher than Asda and Morrisons.Id say Morrisons meat/bakery/fish/deli counters were as good but much cheaper.

I know people who work there and get the staff discount yet still shop at Aldi/Asda/Morrisons instead.

How long before we see some big store closures?.Tesco would be closing some now if it wasnt for the fact they lease most of them and have no choice but to implode.

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Sainsburys were saying earlier this year that they were planning on 3,500 new corner shop Sainsburys by 2017 IIRC - that appears to have gone out of the window now.

I have also spoken with Sainsburys staff who tell me that they shop in Aldi and Lidl because both are cheaper despite their Sainsbury staff discount.

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Aldis are selling 30 day mature scotch beef steaks which I rate better than all other supermarkets. As a proper carnivore I find most super market meats inedible and usually shop at specialist butchers. I eat my steaks rare/blue which is always a proper test. I just gave the aldis ones a go because they had a good "look" to them and was very surprised. I recommend them.

Yes thats on a par with the fillet steaks at M and S and is about £1 cheaper.

But their mince and chicken fillets arent up to much imho, it smells off when you open the box.

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Think I posted a long time ago that when we reached saturation point with the big stores, when they start closing some shops down, that that would be a tipping point for the economy and house prices. Hopefully the housing market is going to crumble like a piece of cheap supermarket cheese! Are we seeing actual store closures, or just cancellation of proposed openings?

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How long before we see some big store closures?.Tesco would be closing some now if it wasnt for the fact they lease most of them and have no choice but to implode.

That's the question.

I wouldn't be rushing out to load up on out of town CRE just yet although most pension funds are likely buying the dips.

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Sainsburys were saying earlier this year that they were planning on 3,500 new corner shop Sainsburys by 2017 IIRC - that appears to have gone out of the window now.

I have also spoken with Sainsburys staff who tell me that they shop in Aldi and Lidl because both are cheaper despite their Sainsbury staff discount.

They purchased some great sites when they bought Jacksons but I've seen plenty with barely any footfall.

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Morrisons seems to have dropped its 2 packs for £5 of dry cure bacon and the same deal for it's best sausages. Now £2.99 each. It used to feel like there were big savings to be had there but now it seems to be Sainsburys/M&S levels. Only go there for coffee now. Aldi for meat etc, and local market for veg.

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Think I posted a long time ago that when we reached saturation point with the big stores, when they start closing some shops down, that that would be a tipping point for the economy and house prices. Hopefully the housing market is going to crumble like a piece of cheap supermarket cheese! Are we seeing actual store closures, or just cancellation of proposed openings?

Currently,it's just reining back openings but we could see some interesting sites coming up for sale once they're deemed surplus to requirements.

Ironic really,as the big supermarkets were -not so long ago- viewed as bulletproof defensive stocks.

Edited by Sancho Panza

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Currently,it's just reining back openings but we could see some interesting sites coming up for sale once they're deemed surplus to requirements.

Ironic really,as the big supermarkets were -not so long ago- viewed as bulletproof defensive stocks.

Plenty of brownfield sites to build housing on, can't think what else it could be used for...lets hope it gets sold for a sensible price, and the housing that is built is something people would aspire to live in. so they can buy or rent it for a price they can afford to pay today and for many years in the future....long-term thinking and planning is rather lacking in this day and age....get rich quick, look no further than the next quarter is all the rage. ;)

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Currently,it's just reining back openings but we could see some interesting sites coming up for sale once they're deemed surplus to requirements.

Ironic really,as the big supermarkets were -not so long ago- viewed as bulletproof defensive stocks.

And not so long ago houses were viewed as bullet proof investments........

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And not so long ago houses were viewed as bullet proof investments........

Supermarkets are one of the few businesses that actually have to compete in a free market so their profit trends to zero.

Housing is about the most restricted market there is hence the profits to be made.

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Aldi plans to double it's UK stores by 2022 adding 35000 jobs.

http://www.theguardian.com/business/2014/nov/10/aldi-35000-jobs-uk-expansion-supermarket-stores?CMP=twt_gu

Cameron seems happy, he doesn't realise that these jobs will just replace the jobs lost at Tesco & Sainsbury.

https://twitter.com/David_Cameron/status/531813450654420992/photo/1

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Supermarkets are one of the few businesses that actually have to compete in a free market so their profit trends to zero.

Housing is about the most restricted market there is hence the profits to be made.

The price of houses is mainly dependent on credit...how "rich" consumers feel also dependent on credit......

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