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LONDON (Alliance News) - Jefferies is worried that its forecasts for J Sainsbury are now looking too optimistic, after the supermarket again saw its sales and market share decline according to the latest data from Kantar.
Jefferies said the data showed the sector as a whole had witnessed another poor trading period, but pressures are mounting at Sainsbury's with a 4.2% drop in sales indicating a current rate of like-for-like sales decline of more than 6%.
"In light of this data, our expectations for a second-quarter like-for-like of -3.2% is starting to look too optimistic, with a contraction closer to 4% now looking more likely. Given the high level of operational leverage, and the extent to which momentum appears to be deteriorating at the business, forecast risk appears highest at Sainsbury relative to peers," it wrote in a note to clients.
Jefferies said the latest Kantar data also showed Tesco sales remain weak, pointed to a better trend at Wm Morrison Supermarkets, and showed that Marks & Spencer's food business remains insulated from the woes of the big four supermarket groups.
J Sainsbury shares were down 5.0% at 254.80 pence Tuesday afternoon, with Tesco down 4.8% at 193.35p, Wm Morrison down 2.7% at 174.24p, and Marks & Spencer down 2.4% at 423.10p.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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