J Sainsbury – The Market’s Hungry For Pandemic-Level Growth

J Sainsbury – The Market’s Hungry For Pandemic-Level Growth
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J Sainsbury plc (LON:SBRY)’s half year revenue, excluding fuel, was £14.9bn, broadly in-line with last year’s lockdown-boosted sales. Compared to pre-pandemic levels, revenue’s up 7.3%. This reflected sales increases in Grocery and Clothing, but a decline in General Merchandise as post-lockdown shopping patterns started to normalise.

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Lower Covid-19 costs meant underlying operating profits rose 8% to £542m.

The group announced an interim dividend of 3.2p per share, and continues to expect full-year underlying pre-tax profits of at least £660m.

The shares were down 3.1% following the announcement.

J Sainsbury's Performance In The First Half

Laura Hoy Equity Analyst at Hargreaves Lansdown:

“You can’t knock J Sainsbury for its first half performance. Sales growth slowed post-pandemic but a decline in Covid-related costs helped the group squeeze out profit growth. Considering the stellar numbers the group was up against from last year, avoiding a revenue decline was enough to raise eyebrows.

However investors aren’t interested in past accolades- particularly as they eye the possibility of interest rate hikes ahead. They’re looking for future growth and unfortunately J Sainsbury isn’t at the top of the list. The group stuck to its guidance for profits of around £660m at the full year. That reflects a 7% decline from last year.

This is particularly concerning considering the group’s lacklustre targets include the all-important festive shopping season. Christmas tends to be supermarkets’ time to shine as people load up on turkeys and champagne, but J Sainsbury’s guidance suggests the supply chain issues and labour shortages this year could prove somewhat of a challenge.”

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)www.valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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