On Tuesday 17 March Sainsbury’s is due to announce its fourth-quarter figures. The outlook for the company’s full-year numbers still looks weak with the adjusted earnings per share called to drop from £0.328 down to £0.264. Sales are called higher at £24.085 billion from £23.949 billion the year before. Profit margins have continued to shrink and the pre-tax profits are set to fall to £661.556 million from £898 million.
Institutional analysts are still less than convinced about the outlook for food retailers and this is reflected in the expectations for Sainsbury’s. Five are rating the company a buy, ten are calling it a hold and ten a sell. The average 12-month price target for the company is 253p, well below the current price in the market of 269p.
The troubles that food retailers have been suffering under have been signposted for some time. The price war that they have been struggling with for the last couple of years is still in place as desperation to maintain market share rather than optimise profits continues to be the focus. Kantar Worldpanel, the specialist food retail analyst, states that Tesco has been the stand out from the big four over the last 18 months with sales up just 1.1%. The last 12 weeks have seen the average spend at the tills drop by 0.5% at Sainsbury’s.
The shares for Sainsbury’s have once again managed to climb back up to the 200-day moving average but are nowhere near hitting overbought territory. It is difficult to see where the good news that will force them higher is going to come from.