J Sainsbury PLC (LSE:SBRY) will report third quarter earnings on Wednesday 10 January after Kantar data showed the supermarket had enjoyed a pre-Christmas gift of market share gains.
According to Kantar, Sainsbury’s had scored sales growth of 10.2% over the 12 weeks to late November, with Wednesday’s report set to clarify how the chain fared over a similar period to mid-December.
Outdone only by discounter Aldi in terms of sales growth during the period, Sainsbury’s enjoyed an increase in its market share to 15.6% as a result.
Positive news for Sainsbury’s has not just been limited to the latter half of the year though, with analysts arguing it had finally managed to lift itself out of an awkward middle ground in the supermarket sector following strong half-year results in November.
That is, finding the right balance between luxury and affordability, AJ Bell’s Russ Mould said at the time, making it “more expensive than Asda, Tesco PLC (LSE:TSCO) and the discounters [...] but not as pricey as Waitrose”.
Indeed, Sainsbury’s hiked free cash flow guidance in November, tipping the figure would come in at £600 million for the full-year, rather than £500 million as originally expected.
Pre-tax profit was tipped at the interim stage to come in between £670 million and £700 million for the full-year, meanwhile.
Wednesday’s report will provide further insight into these targets therefore, as the supermarket looks to continue rebuilding its share price following a trough in October 2022 as retailers struggled on the back of soaring inflation.
Shares have since recovered nearly 78% to 302.62p as of Tuesday’s open, though warnings from the British Retail Consortium have weighed in as the market reopened for the new year.
Despite subsiding inflation to 6.7% last month from 7.7% in November, as per the industry body’s figures, upward pressure from tougher border checks and new business rates loom this year, it said.
Given Sainsbury’s own efforts to keep prices down as consumers increasingly turn to discounters in response to higher costs, this could spell bad news for the chain looking ahead, analysts argue.
“Its [Sainsbury’s] margins have already been under the cosh as the grocer has tried to stay competitive in pricing,” Hargreaves Lansdown analyst Susannah Streeter said.
“The thought of more pressure to come isn’t welcome.”