Sainsbury s thrifty Christmas begets weak key sales

Better-than-expected, is one thing, absolutely strong is another. No one would say any of the UK retailers which have beat expectations so far as in the reporting season have done so resoundingly. Sainsbury’s Q3 trading statement, released on Tuesday, fell into the same pattern.

Gross sales rose 0.8% after +0.2% in Q2
Q3 like-for-like sales -0.4% vs. -0.7% market forecast, -1.1% in Q2
2H LFL sales guidance upgraded to “better than the first (half)” from “similar” to H1 previously
Customer transactions in 7 days pre-Christmas at 30m, +2.6% y/y.

Small change. Though recently, such slim pickings have been enough to lift a retailer’s shares on the day of its disclosure. Not this time. SBRY shares have been skittish all day and were slightly lower at the time of writing. Investors almost certainly gave more weight to Sainsbury’s rationale for a deal with Home Retail Group which the supermarket pushed again on Tuesday. We scrutinise the logic of the deal here.

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