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So Sainsbury’s has been making plenty of headlines following the announcement of its planned merger with Asda. But that aside, there is still the day job to think about. While Sainsbury’s is focusing on getting the Asda deal past the Competition and Markets Authority, there are all its bricks and mortar and online rivals to deal with, and it needs to keep demonstrating that it is going to be adding value by purchasing Argos.

The latest numbers out from Kantar Worldpanel are not so encouraging, to say the least. They show further market share losses for Sainsbury compared to a year ago, as Aldi and Lidl have made fresh inroads. Sainsbury’s market share has fallen to 15.6% from 16%, while Asda’s has fallen from 15.2% to 15.1%.

According to Russ Mould, investment director at stock broker AJ Bell:

“Sainsbury’s Q1 trading statement will therefore provide the latest insight into the grocer’s performance. Clothing and General Merchandise both lost momentum in 2017-18 but grocery had shown some signs of improvement, in terms of total sales growth, including Argos.”

In terms of like for like sales, including Argos but excluding fuel, growth was 1.3% for the whole of the year to March 2018, although momentum tailed off, given a sequential progression of year-on-year increases of 2.3%, 0.6%, 1.1% and finally just 0.9% in the fourth quarter.

Market sits and waits for Sainsbury trading statement

Looking at the 30 day chart, it can be seen that the market has not made its mind up about Sainsbury’s. The Sainsbury share price started June around 317 and has ended it…at 317. It never fell below 300 and has remained relatively range bound. We think investors are sitting on their hands, waiting to see whether the Asda deal gets waved through. On top of that, the market can sense the dynamics of the UK super market sector shifting in favour of the discount retailers.

The UK high street has been in trouble for some months now. Disposable barbecues and cold beer may be flying off the shelves at Sainsbury’s at the moment, as the UK basks in a heat wave, but UK shoppers are not feeling as confident about their finances as they were last year. The lack of England fans in Russia at the World Cup may be an indicator of how tight those finances really were: 20,000 found the money to go to Brazil in 2014, but that was before the Brexit vote. The Sainsbury trading statement will make interesting reading on Wednesday.

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Stuart Fieldhouse

Stuart Fieldhouse has spent over 20 years in journalism and financial communications, including six years as a wealth management correspondent for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong.

Stuart has worked as head of content at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Stuart continues to work with hedge funds, private banks, stock exchanges and other financial institutions on their communications, data and marketing requirements.

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