Investors unimpressed by Sainsbury’s ‘lacklustre’ targets

Sainsbury’s could be hit by “supply chain issues” this Christmas, experts have said, as shares dipped following yesterday’s trading update.

Despite posting a healthy £389 million profit for the first half, the supermarket’s share price has fallen 2.8 per cent below Wednesday’s close.

According to Proactive, one concern was its full-year profit expectation of £660 million, down seven per cent on 2020.

Hargreaves Lansdown analyst Laura Hoy called this “particularly concerning”, noting that “the group’s lacklustre targets include the all-important festive shopping season”.

READ MORE: Sainsbury’s rubbishes rumours of Brexit store closures

She continued: “Christmas tends to be supermarkets’ time to shine as people load up on turkeys and champagne.

“Sainsbury’s guidance suggests the supply chain issues and labour shortages this year could prove somewhat of a challenge.”

Chief executive Simon Roberts tried to downplay rumours of festive food shortages in yesterday’s results.

“Our scale, advanced cost saving programme, logistics operations and strong supplier relationships put us in a good position as we head into Christmas,” he claimed.

With labour and energy costs soaring, inflation – expected to peak at 4 per cent this winter – may also have deterred investors.

“It is clear that the market is worried the sector will come under greater pressure in the months to come,” IG chief market analyst Christ Beauchamp said.

“While the story of US earnings season has been about companies able to pass on higher costs… supermarkets will find it harder to do this.”

However, Shore Capital analyst Darren Shirley said the grocer’s board was “piloting the good ship Sainsbury well”.

He added: “If investors that have made a return on their Morrisons position wish to retain an interest in the UK grocery field then Sainsbury and Tesco are sound homes.”

Morrisons shares recently soared from 178p to around 290p over the course of a private equity bidding war.

It briefly became the fastest-rising member of the FTSE 100, but dropped from public listings this month after its purchase by Clayton, Dubilier & Rice (CD&R).

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