Sainsbury’s bucks the trend as shares rise 3% despite FTSE 100 drop
First half (H1) earnings at Sainsbury’s show that it is possible to cut costs and still deliver an upside surprise for investors. The supermarket’s numbers show that it is gaining market share from rivals.
Sainsbury's shares up
Share of supermarket chain Sainsbury's are on the rise today, bucking the overall market trend.
The company reported first half (H1) earnings. Boss Simon Roberts says he has great sympathy with his customers as we all have to contend with higher interest rates and so higher prices, and big strains on household budgets.
So let's take a look at the numbers. The company saw profits slump 8% in the latest six months as the cost of living pressures offset slightly improved revenues.
But if you look at the like-for-like sales, excluding fuel, down 0.8%, the company says it will invest more than £500 million by March 2023 and is keeping prices lower by cutting costs at a faster rate than its competitors, meaning that they have more firepower to battle inflation.
But of course they are up against some really big firepower as well, with the likes of Lidl and Aldi and all the other major supermarket chains, all trying to vie for the same ground.
Share price chart
Let's take a look at what Sainsbury's share price has done because it really has been an impressive lift in its shares.
The stock, after an hour and a quarter worth of trade this morning, is up 2.8% off the highs. But just trading at this wavy blue line here, which is the 100 period moving average, but we're in levels pretty much not seen since the middle of September this year.
So it was an impressive number coming out this morning and it has been appreciated by traders who have bid the stock up.
And of course, you've got to bear in mind the fact that the FTSE 100 is down today because of the word from the Fed last night and Bank of England (BoE) is raising interest rates as well today, up by an expected 75 basis points to 3%. So that's going be another headwind for these companies.
But they are seemingly coping well in trying to engage with customers with lower prices, but they're cutting costs at the same time. And it's this that I think ultimately could well end up showing through in full year profit numbers.
We'll have to see how things go, but at the moment at least Sainsbury's stock is up by around about 3%.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets