Earnings Show General Slowdown at Sainsbury’s: Gray

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Jan. 08 (Bloomberg) -- David Gray, Analyst at Planet Retail, discusses the retail environment in the U.K. and what the earnings mean for J Sainsbury. He speaks on Bloomberg Television’s “On The Move.” (Source: Bloomberg)

Look at the previous quarters.

They are now flat.

Slight concern for the future.

I think they reflect a convergence among the big four.

We are expecting tesco to the negative, sainsbury's at the upper end.

Once you've read out the fuel, it was again a consecutive growth.

That is nine years.

They are doing something very correct.


Essentially they had a strong focus on expansion of convenience stores.

The convenience business is doing very well.

Their online grocery business is also doing very well.

I think one of the think they have done really well is a focus on their own label ranges, good quality within their own label ranges.

A real focus on that quality within those ranges.

Talk to me about this.

Every time we cover retail, no shock here but with others around for quite some time, they are the disruptors.

Where does retail go?

Take me forward in time.

Is it still just slugging it out on price?

How does it evolve?

I think the discounts are becoming more mainstream.

The discounters, the hard discounters are moving to introduce more fresh food into their stores, more high street locations.

They are becoming more of a challenge.

So that is going to continue to grow?


The discounters still hold a very small share of overall market within the u.k. so they are still a very small proportion.

In terms of growing their market share, how exponentially could that happen?

They are growing very rapidly.

They are still going to be a very small percentage of the overall market.

We caught up with the cfo this morning and he talked a lot about the other sides of things apart from food, technology and banking.

Again, these add-ons, are we just getting distracted?

I think sainsbury is diversifying.

These areas are going strongly for them.

The point to make is, it is still a small percentage of their sales, smaller than tesco.

They are now suffering from the fact.

You say that the online proposition is going to be the winning proposition.

We saw deep discounting on the nonfood side.

Are we going to see more price wars come through in 2014? i think so.

Price is the key that around and has been for a long time.

Mccain and prices, being competitive.

Takeout target?

They have 25% of the company at the moment.

Du think there might be m&a in this area?

It is possible.

There has been speculation for a number of years.

Anything is possible.

Marks and spencer is, what is your call?

Improving numbers especially on the food side of the business.

We are looking at growth, possibly growth in marks & spencer's. big focus on innovation within the product ranges.

In terms of clothing, not quite so good.

Likely to see declines.

Overall the food business did really well.

I think that reflects the premium end of the market doing really well over christmas.

Great to have you here.

David gray, retail analyst at planet retail.

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