Sainsbury's: What the analysts say

Neil Saunders, Conlumino

“By themselves these results are good; taken in the context of the wider market they represent a very strong outperformance by Sainsbury’s. A performance which has helped lift market share to one of its highest levels in years.

“In our view, Sainsbury’s has positioned itself well and is now taking advantage of the new consumer mindset in food and grocery. Although it has invested in price and has continually emphasised value this has never been done at the expense of quality, service or food provenance.

“Indeed, campaigns such as Feed your Family have purposely linked good food with value for money; while the Brand Match initiative has provided a simple, compelling way of underlining Sainsbury’s price competitiveness.”

Darren Shirley, Shore Capital

“Mr King & Co have surprised us with the effectiveness of their marketing initiatives, including Brand Match, and we do not dismiss outright Sainsbury’s capability to proceed further. We do, however, believe that it may be more difficult for progress to be made.

“Against fulsome industry comparatives, with a market leader that is clearly committing more operating resource to the cause, Sainsbury may find it more challenging or at least more costly, to sustain its recent relative outperformance.”

Nick Bubb, Independent

“The big story was that Sainsbury’s would today signal the end of the space race in the industry, but cutting cap-ex plans for 2012/13 to £1bn and…it has done exactly that, with a return to 5% annual space growth.

“The business is still showing its rivals a clean pair of heels, with strong LFL sales and market share growth. Sainsbury’s is still hitting the right notes with its marketing and advertising and couponing and they are entitled to be confident of standing up to whatever Tesco etc will throw at them.”

Phil Dorrell, Retail Remedy

“Justin King can be proud of not just the performance in tough times but the customer-friendly image his company is cultivating.

“Customer-friendly is the ground that Asda used to rule when King was there, too — and it has got a lot to do with his skills and media savvy.

“The non-food operation is improving but Sainsbury’s isn’t trying to be the new Dixons or Comet. Sainsbury’s has managed to keep its feet on the ground and has simply created ranges and space for non-food rather than litter its aisles with 40” TVs.”

Danielle Pinnington, Shoppercentric

“Sainsbury’s are nearing the end of their capital investment programme now – so compared to competitors they seem to have invested ahead of the curve which has benefitted them during the downturn. In comparison, Morrisons are only really beginning to invest in refreshes, and Tesco have yet to start.

“So with competitor activity in this area starting now, can Sainsbury’s maintain their current growth, or will we see the balance tip back to the others?”