Today’s announcement that J Sainsbury PLC (LSE:SBRY) is raising the hourly wage for 127,000 employees to £11 from February may come at a £185mln cost, but equities analysts at house broker Shore Capital have reiterated their faith in the supermarket chain’s management.
Sainsbury’s has adopted a “clear and sensible strategy” under chief executive Simon Roberts, said researcher Clive Black, who pointed out the group’s “very strong balance sheet, with virtually no underlying non-lease net debt, and a free cash flow-funded attractive dividend”.
On the wider sector, “we sense that the UK supermarkets have gained overall share of retail expenditure in December as folks focused upon food & beverages in particular,” said Black, although “with a postal strike hitting elements of the online retail trade from mid-December, we will observe with interest how Argos performed through the Christmas period as well”.
In the lead up to Sainsbury’s third-quarter earnings call on 11 January, Shore Capital has reiterated its 'buy' position on SBRY shares.