Sainsbury's Posts Strong Q2 Sales Growth, Upgrades Profit Guidance on Grocery and Argos Gains
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Sainsbury's reported strong Q2 results with 7.7% like-for-like sales growth excluding fuel. Grocery sales were up 10.1% and Argos up 1.7%.
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Grocery growth remained robust despite healthy prior year comps, reflecting Sainsbury's price investments and Aldi price match scheme. This has enhanced value perception.
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Sainsbury's is gaining grocery volume from all key competitors and general merchandise share with Argos, aided by its online capabilities.
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Management upgraded profit guidance to GBP 670-700 million, reflecting strong performance.
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Shares are fairly valued. Morningstar has a GBP 278 fair value estimate and no-moat rating for Sainsbury's.