Barclays has struck a note of caution ahead of interim results at food retailer J Sainsbury PLC on 2 November.
The stock has fallen for the second day in a row, down 1.8% at 256.90p, after Barclays became the latest broker, following UBS yesterday, to highlight an easing in general merchandise (GM) sales.
Barclays warned of a "significant slowdown for GM sales (from plus 4.0% in Q1 to minus 4.0% in Q2), driven by a combination of unhelpful weather, the cycling of the boost from improved availability and a bigger drag from the closure of Argos stores in Ireland.
"This may take the shine off what we expect to be a strong half for grocery sales and profitability," it said.
"We still expect Sainsbury to be able to deliver comfortably within its FY23/24 PBT guidance of £640-700 million, but the performance of Argos at Christmas will likely play a big part in determining precisely where the FY PBT ultimately lands," Barclays thinks.
It retains an 'overweight' rating but maintains a slight preference for Tesco PLC (LSE:TSCO).