Sainsbury’s shares: can they regain momentum after full-year results?

J Sainsbury published its 2020/21 preliminary full-year trading results today, revealing pre-tax profits plunged 39% year-on-year to £356 million. How will Sainsbury’s shares react to the substantial losses incurred by Covid-19?

  • Sainsbury's grocery sales up 7.8% year-on-year (YoY)
  • Online grocery sales double YoY
  • Company incurred £485 million in additional costs due to Covid-19
  • Looking to trade Sainsbury’s shares? Open an account today

Sainsbury (J) (SBRY.L), the UK’s second-biggest supermarket chain, released its preliminary full-year (FY) results for 2020/21 today. Sainsbury’s confirmed that pre-tax profits plunged from £586 million in 2019/20 to £356 million in 2020/21, with the brand facing additional operating costs from the Covid-19 pandemic and its decision to forgo business rates relief.

Will Sainsbury’s shares rise given that encouraging Q3 trading figures continued into Q4?

According to the official publication detailing Sainsbury’s preliminary final-year results for 2020/21, grocery sales remained buoyant in quarter four (Q4) as in quarter three (Q3). They were up 7.1% YoY compared with 7.4% in the previous quarter.

In addition, general merchandise and clothing sales also registered impressive gains in Q4, posting 17.6% and 4.2% growth, respectively.

It all helps to build the picture that Sainsbury’s is ready and waiting to return stronger in the post-pandemic recovery of 2021/22. Sainsbury’s chief executive officer (CEO), Simon Roberts, noted the chain’s ‘bold three-year plan’ to ‘drive improved performance’.

As a consequence, the board has proposed a final dividend of 7.4p per share, taking the total FY dividend to 10.6p per share, in line with the previous year despite a 39% decline in underlying profits.

The confidence from the board resulted in Sainsbury’s shares opening from 250p of today’s trading session. However, there are investor concerns over the possible stagnation of supermarket momentum once the country fully reopens post-lockdown and that led the price to quickly fall to 235.39p within the first hour of trading.

Nevertheless, Sainsbury’s was the only UK supermarket chain to outperform the FTSE 100 index in 2020/21, which could be cause for cautious optimism.

Can the Sainsbury’s share price remain bullish thanks to strengthened ties with Deliveroo?

In order to maintain momentum and shake off fast-expanding discount supermarket chains like Lidl and Aldi, Sainsbury’s is looking to forge an innovative partnership with takeaway delivery brand Deliveroo (ROO.L).

Having successfully trialled Sainsbury’s deliveries via the Deliveroo app in ten stores, the partnership is set for expansion to 22 additional stores across London, Newcastle, Liverpool, Leeds, York, Glasgow and Aberdeen.

Its new two-year agreement will help Sainsbury’s to provide home grocery deliveries to a broader demographic, whilst catering for those who ‘need something in a hurry’, according to Sainsbury’s director of eCommerce, Nigel Blunt.

How will investors react to reports it could go private?

Private takeover speculation also abounds regarding Sainsbury’s in the week of its FY figures. After the successful acquisition of Asda by the Issa brothers, reports suggest that J Sainsbury could be the next high-street supermarket subject to a mergers and acquisitions (M&A) approach. These rumours first circulated in January 2021.

Vesa Equity Investments, owned by Czech billionaire Daniel Kretinsky, opted to increase its shareholding in the firm to 9.99%, acquiring over £300 million worth of shares from Qatar’s sovereign wealth fund.

Vesa confirmed its intentions to acquire ‘strategic minority participations in publicly listed companies across the wider food retail distribution segment’. Mr Kretinsky failed in an attempt to secure a controlling stake in German brand Metro AG (CECG.DE) in 2019. However, a spokesperson for Mr Kretinsky said that Vesa perceives Sainsbury’s as ‘an attractive investment opportunity’.

Go long or short on Sainsbury’s shares after its FY earnings

Take your position on UK shares for just a small initial deposit with CFDs.

Open an account to start trading or investing in UK shares.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

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

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.