Company Reports

Sainsbury’s has agreed to sell Argos, its general merchandise business, to Swift Partners. The deal is expected to close in February 2027, with full separation expected by 2029. Swift Partners is a newly formed company, established for the Argos transaction.

Sainsbury’s fiscal 2026 results included retail sales (excluding fuel) growth of 4.3% and a retail operating profit decline of 1.1%. Shares fell 5% in early trading on April 23.

Sainsbury’s is the UK’s second-largest grocer, with a network of over 1,600 stores under its namesake and Argos banners. Despite its market presence, the fierce competitive nature of the UK grocery industry makes it challenging to carve out a competitive edge.

Sainsbury’s is the UK’s second-largest grocer, with a network of over 1,600 stores under its namesake and Argos banners. Despite its market presence, the fierce competitive nature of the UK grocery industry makes it challenging to carve out a competitive edge.

Sainsbury's reported its fiscal third-quarter and Christmas-period trading statement, posting like-for-like sales growth (excluding fuel) of 3.4%. Shares fell around 6% at the market open on Jan. 9, 2026.

J Sainsbury reported its interim fiscal 2026 results, with retail sales (ex. fuel) growth of 4.8% and underlying operating profit growth of 0.2%. Shares were up around 1% at the market open on Nov. 6.

Sainsbury’s is the UK’s second-largest grocer, with a network of over 1,600 stores under its namesake and Argos banners. Despite its market presence, the fierce competitive nature of the UK grocery industry makes it challenging to carve out a competitive edge.

We are transferring coverage of four multinational grocers: Tesco, Sainsbury’s, Carrefour, and Ahold Delhaize. Tesco and Sainsbury’s are the largest grocers in the UK. Carrefour operates across Europe and Latin America, while Ahold is a leader in several European markets and North American regions.

J Sainsbury reported preliminary results for the 52 weeks ended March 1, 2025, that were in line with our expectations. We are impressed with the firm’s improving top-line and profitability growth despite an unfavorable macroeconomic environment. We expect Sainsbury can continue to grow volumes ahead of the market in the next fiscal year. However, with higher costs and intensified price competition, the firm expects fiscal 2026 profitability and cash flow to remain relatively flat. We maintain our GBX 315 per share fair value estimate and continue to view the stock as fairly valued.

We maintain our GBX 315 fair value estimate for no-moat J Sainsbury after the firm reported its trading statement for the 16 weeks to Jan. 4 that was broadly in line with our estimates. Management maintained its full-year fiscal 2025 guidance for retail underlying operating profit and retail free cash flow, while raising its financial services underlying operating profit target to around GBP 30 million from GBP 15 million-GBP 25 million. We think these targets are attainable.

We maintain our GBX 315 per-share fair value estimate for no-moat J Sainsbury after the firm reported robust first-half fiscal 2025 results, which were in line with our expectations. We believe Sainsbury's current pricing strategy and execution place the grocer in a strong position in an increasingly competitive UK grocery market. Management maintained its full-year fiscal 2025 guidance for retail underlying operating profit and retail free cash flow, while raising its financial services underlying operating profit target to between GBP 15 million and GBP 25 million (previously between break-even and GBP 15 million). We think these targets are attainable.

While Sainsbury’s has historically distinguished itself from its peers with a higher-quality (premium-priced) food offering, it has been underperforming its peers due to a lack of focus and responsiveness to an increasingly value-oriented UK consumer base and a below-average value perception. Recent investments in lower prices have reverted trends with the grocer now in a solid position in the very competitive UK grocery market.

J Sainsbury's first-quarter trading update showed like-for-like sales growth of 3%, excluding fuel sales (2.6% including fuel sales). Grocery sales growth was solid at 4.8% year over year, with strong volume growth and market share gains. General merchandise and clothing sales were down 4.3%, with Argos sales down 6.2% in the quarter. The grocer commenced the previously announced GBP 200 million share buyback program—to be completed in fiscal 2024/25—and expects to return at least GBP 250 million to shareholders once the sale of Sainsbury's Bank's core banking business to NatWest is completed and the future model for Argos Financial Services is in place.

Natwest purchased Sainsbury's' retail banking assets and liabilities in a deal that follows a similar transaction between Barclays and Tesco in February this year. The deal is small relative to Natwest's total balance sheet, but it does help the bank increase its exposure in credit cards (GBP 1.1 billion, up 19%) and unsecured personal loans (GBP 1.4 billion, up 15%) where it is lagging peers Barclays and Lloyds. Natwest will receive GBP 125 million at the completion of the deal targeted for the first quarter of 2025. Similar to Tesco, Sainsbury has opted to retain its commission fee businesses including insurance, travel money and ATMs as these businesses are typically less capital intensive.

J Sainsbury reported preliminary results for the 52 weeks ended March 2, 2024, with like-for-like sales growth of 7.5%, excluding fuel sales (3.8% including fuel sales). Grocery sales growth was robust at 9.4% year over year while clothing sales growth was negative 6.4% (from down 1.7% in the third quarter and negative 6% during the Christmas period). Meanwhile, Argos sales experienced a marginal drop of 0.5% overall, yet when the impact of the Argos closures in the Republic of Ireland is excluded, sales actually improved by 1.6%.

Sainsbury's outlined its "Next Level Sainsbury's" strategy in a recent update, ahead of the company's Capital Markets Day, emphasizing its commitment to medium-term growth through fiscal 2027. The plan includes generating over GBP 1.6 billion in retail free cash flow (versus GBP 1.9 billion in our model over the next three years to fiscal 2027), investing GBP 800 million-GBP 850 million annually in capital expenditures (versus GBP 730 million in our model), and saving GBP 1 billion in costs by incurring GBP 150 million in one-off cash costs. Additionally, the strategy aims for retail operating profit growth each year, food volume growth ahead of the market, higher customer satisfaction, colleague engagement, and a commitment to environmental and social goals. The company also plans to enhance fresh food choices in stores and expects significant grocery volume gains from this initiative. On a more positive note, the grocer announced its first share buyback program and a progressive dividend policy, with GBP 200 million earmarked for share buybacks in fiscal 2025. The focus on expanding the food range in 180 stores, reallocating space from general merchandise to food, and opening 75 new Sainsbury's Local convenience stores underscores Sainsbury's strategy to double-down on serving consumer needs and preferences better in an increasingly competitive U.K. grocery market. In addition, the transformation of Argos and a new direction for financial services, moving toward third-party provision, is a strategic shift for the group. The higher capital expenditure guidance, which will slightly impact our free cash flow estimates, is a negative surprise while the overall financial outlook remains unchanged. We don't expect to materially change our GBX 301 fair value estimate for Sainsbury's after accounting for slightly lower free cash flow estimates in the midterm due to the step-up in capital expenditures. Shares are fairly valued.

J Sainsbury reported a fiscal third-quarter trading update with like-for-like sales growth of 7.4%, excluding fuel sales. Grocery sales growth was robust at 9.3% year over year—Christmas grocery sales rose 8.6%, with stronger volume growth offsetting lower inflation. Clothing sales growth continued to decline, albeit at an improved rate, being negative 1.7% in the quarter and negative 6% during the Christmas period. As a comparison, clothing sales growth was negative 8.4% in the first half and down 14.6% in the second quarter. Meanwhile, Argos sales declined 0.9%, from being down 2.6% in the second quarter.

While Sainsbury’s has historically distinguished itself from its peers with a higher-quality (premium-priced) food offering, it has been underperforming its peers due to a lack of focus and responsiveness to an increasingly value-oriented U.K. consumer base and a below-average value perception. Recent investments in lower prices have reverted trends with the grocer now in a solid position in the very competitive U.K. grocery market.

J Sainsbury reported first-half fiscal 2024 results with like-for-like sales growth of 7.7%, excluding fuel sales. Grocery sales growth was robust at 10.1% (8.9% in the second quarter), clothing continued to underperform (negative 8.4% in the first half and down 14.6% in the second quarter), and Argos was up 1.7% (down 2.6% in the second quarter). Grocery performance was particularly strong despite healthy comps last year (up 3.8% in the second quarter of 2023). Despite the lower growth number in the quarter (up 3.3% excluding the impact of the planned closure of Argos in the Republic of Ireland), Argos' performance held up well, reflecting a continuation of market share gains. Sainsbury's investments in low prices have never been higher, which we believe along with Aldi's price match scheme on roughly 400 high-volume fresh food products, have been key drivers in enhancing the value perception gap with competitors. The grocer has been investing aggressively (GBP 118 million) in targeted price cuts (consistently inflating behind key competitors). We believe Sainsbury's current strategy and execution, along with its already strong online capabilities, place the grocer in a strong position in an increasingly competitive U.K. grocery market. The grocer is reporting consistent growing volumes and market share gains across the grocery business (gaining volume from all key competitors) and the general merchandise market with Argos. Given strong performance, management upgraded guidance for underlying profit before tax to GBP 670 million-GBP 700 million versus GBP 640 million-GBP 700 million before and GBP 683 million in our model in fiscal 2024. We maintain our GBX 278 fair value estimate and no-moat rating. Shares are fairly valued.

J Sainsbury reported a first-quarter fiscal 2024 trading update with like-for-like sales growth up 9.8%, excluding fuel sales. Grocery sales growth was 11%, clothing was negative 3.7%, and Argos was up 5.1%. Grocery performance continued to recover sequentially (up 7.4% in fourth-quarter 2023, up 5.6% in third-quarter 2023, and up 1.2% in second-quarter 2023), along with general merchandise sales aided by Argos. Argos' sales growth held up well, up 5.1% versus 9.3%/4.5%/1.6% in the fourth/third/second quarters and down almost 21% in first-quarter fiscal 2022. Sainsbury's price lock commitment covers over 2,000 everyday products, which we believe along with Aldi's price match scheme on roughly 300 high-volume fresh food products, is central to enhancing the value perception gap with competitors. The grocer has also been investing aggressively (GBP 60 million) since March in targeted price cuts (versus price increases for the market, according to Sainsbury's) across more than 120 essentials like bread, milk, and pasta. We believe Sainsbury's current strategy and execution, along with its already strong online capabilities, place the grocer in a strong position in an increasingly competitive U.K. grocery market. The grocer is already reporting a return to positive volume growth and market share gains across the grocery business and general merchandise market with Argos. Guidance for underlying profit before tax of GBP 640 million-GBP 700 million versus GBP 683 million in our model in fiscal 2024 remains unchanged. We don't expect to change our GBX 278 fair value estimate and no moat rating. Shares are fairly valued.