Sainsbury's Reveals Buoyant Christmas Sales

Maynard Paton

By

Maynard Paton

Published in Company Comment on 9 January 2013

J Sainsbury plc (LON: SBRY) said it generated sales of more than £100m on Christmas Eve.

The shares of J Sainsbury (LSE: SBRY) (NASDAQOTH: JSAIY.US) dipped 2p to 337p during early London trade this morning after the supermarket issued its Christmas trading statement.

Sainsbury's declared the week before Christmas had seen the company's strongest trading ever, with customer transactions exceeding 27 million.

The festive performance helped the retailer lift total turnover by 3.9% during the fourteen weeks to 5 January.

The FTSE 100 member said like-for-like sales had improved by 1.5% during the same period, which extended the group's run of consecutive quarters of like-for-like growth to 32.

However, the 1.5% like-for-like figure was less than the 1.7% the supermarket recorded during the preceding six months.

Justin King, the chief executive of Sainsbury's, said:

"This Christmas we have helped more customers than ever to Live Well for Less, delivering another quarter of good sales in a challenging retail environment, increasing market share. Like-for-like sales excluding fuel were up 0.9 per cent, which was on top of a very strong Christmas last year, giving a two-year like-for-like growth figure of 2.9 per cent."

Mr King added that particular best-sellers included clothing, up 10%, crockery, up 15%, and toasters, up 24%.

Prior to today, City experts were expecting the retailer's current-year earnings to increase by about 5% to almost 30p per share and the dividend to be lifted by a penny to 17.1p per share. Those projections place the shares on a P/E of 11 and yield of 5.1%.

Of course, whether today's Christmas update, that share-price valuation and the general outlook for the supermarket sector make Sainsbury's a 'buy' remains your decision.

But if Sainsbury's is your type of stock, this special free report may be just what you need to help you invest this year. You see, the report covers the defensive sectors the City's best-known income investor -- Neil Woodford -- is relying for 2013.

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> Maynard does not own any share mentioned in this article.

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Comments

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SevenPillars 09 Jan 2013 , 10:21am

A few months back Sainsbury seem to be the flavour of the month in the food retailing sector, now even after announcing good results the market seems to want to focus again on the negative aspects of what it is reporting. Down almost 4% so far today, one broker issuing a downgrade in the belief that Sainsbury will struggle to keep on outperforming, especially as Tesco are fighting back.

I get the feeling that Tesco is probably the new flavour of the month in the sector, especially if they announce they are selling Fresh and Easy this week.

AleisterCrowley 09 Jan 2013 , 10:39am

Hmm, they are getting hammered -3.7%
Lord knows what bad results would have done to the sp- they haven't gone ex div today or something have they ? I can't see my Bloomberg from here...

richjfool 09 Jan 2013 , 1:22pm

Sainsbury have had a good run and been something of the "in flavour" (supermarket) for much of 2012, so a fallback wouldn't seem too much of a surprise..

I wouldn't be too keen to buy SBRY after such a good run either.

eccyman 09 Jan 2013 , 2:37pm

supermarket sector is like the spokes of a wheel, ie one rises as another fool. The sector as a whole is good, therefore a good strategy is to buy and hold SBRY, MRW & TSCO.

F958B 09 Jan 2013 , 4:24pm

Hi eccyman

Yes, the supermarket sector does seem to be a bit of a money-go-round, with each one having a turn at taking the lead while another stumbles.
Meanwhile, the dividends keep flowing, underpinned by strong financial positions and strong dividend cover. The resilience of the companies was proven during 2007-9 when they were able to continue raising dividends during a period when vast numbers of companies in other sectors cancelled or reduced payouts to shareholders at a time when perhaps their shareholders might have appreciated a little extra income (such as if they had been made redundant, lost overtime, reduced working hours, salary freezes etc).

Morrison's raised their payout by 11% last year. Sainsbury by 7%. Tesco by 2% but Tesco should increase to mid-single-digit growth once they've sorted themselves out..

I would expect the average dividend increase for the year ahead to be mid-single-digit around 5%; matching or exceeding inflation. When the economic situation eventually brightens, the companies should be able to raise dividends by high-single-digit amounts.

With an average forward yield around 4.8%, likely to grow at 5%, strongly underpinned, it's an attractive proposition for income-seekers.

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