Sainsbury’s Remains Cautious on Sales Outlook After Lockdown Bump

(Bloomberg) -- J Sainsbury Plc said it’s still cautious on the outlook for the year even after first-quarter revenue benefited from heightened demand for groceries as people work from home.

• Comparative retail sales excluding fuel rose 8.2%, ahead of expectations, in the three months through June 27.

Key Insights

• While results so far this year have beat the company’s base-case expectations, Britain’s second-largest grocer said it’s maintaining that outlook for the full year because good weather played a role in the outperformance. The forecast is for flat pretax profit in the year through March 2021.
• Optimism about the sales beat will be offset by Sainsbury’s warning that extra costs of running stores may be slightly higher than the 500 million pounds ($619 million) it forecast earlier.
• Chief Executive Officer Simon Roberts, who took over the running of Sainsbury at the start of the month, said the business has changed fundamentally from four months ago. Online grocery sales have more than doubled in recent weeks, with the digital SmartShop program making up more than half of some supermarkets’ revenue.

Market Reaction

• The shares have fallen 9.2% this year.

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