J Sainsbury plc’s Nine-Year Sales Streak Ends

The share price of Sainsbury’s (LSE: SBRY) (NASDAQOTH: JSAIY.US) fell by 1% to 309p during early trade this morning, after the grocer revealed its first fall in sales for nine years.

The firm stated that like-for-like sales fell by 3.1% excluding fuel in the 10 weeks to 15 March, and claimed that the market is growing at its slowest pace since 2005.

Sainsbury’s added that falling food prices, the late timing of Easter and Mother’s Day, as well as bad weather all contributed to lower growth.sainsbury's

The FTSE 100 company confirmed, however, that it has maintained market share at 17% — something its industry peers have struggled to succeed at.

In addition, it described growth in the convenience business as “strong” at 15%, with two new stores a week opening, while the online groceries business is growing 6% year-on-year.

The chief executive, Justin King, commented:

“Although some economic indicators are showing an improvement in the health of the economy, we expect the outlook for customers to continue to be challenging for the coming year. We remain confident that our differentiated offer, supported by ‘value for values’, Nectar data and Brand Match, will allow us to outperform our peers in the year ahead.”

Analysts expect Sainsbury’s upcoming annual results to reveal earnings per share of 28p and a dividend equivalent to 16p per share.

Therefore, at the current share price, Sainsbury’s trades on a P/E of 11 and offers a potential income of 5.2%. The dividend is covered 1.8 times by earnings.

Of course, the decision to ‘buy’ — based on those ratings, today’s results and the wider prospects for the grocery sector — remains your decision.

Now, while Sainsbury’s 5.2% yield beats the 3% FTSE average, that’s not the only thing you should look for in an income stock.

If you’re looking to build the ideal dividend portfolio, why not read our free report, “How To Create Dividends For Life”.

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Mark owns shares in Sainsbury's.