Morrisons set to outpace Sainsburys again

Morrisons is in third place after Sainsbury’s in terms of UK grocery market share, but investors think that pecking order may not last.

Over a year, Morrisons’ stock added around 27% up to Tuesday’s close, whilst Sainsbury’s, although well off their post Brexit-vote lows, was 3% lower.

Morrisons' stronger price return reflects the fact that among the Big 4 UK retailers, it is no longer the runt of the litter. It did acknowledge, earlier in the year, uncertainties ahead that all consumer-facing companies will face. The group pointed particularly to “the impact on imported food prices if sterling stays at lower levels”. Again, like its rivals, it also faces pressures from pension fund depreciation and the increasing burden of statutory wage rises.

Against these concerns, the return of grocery price inflation this year will be a double edged sword even for the most robust retailers. Partly due to seepage from galloping food manufacturing and import prices after sterling’s devaluation last year, rising high street prices flatter supermarkets’ top lines, but the worry is the potentially negative impact on consumer behaviour.

Retail sales data have already begun to show a sharp slowdown in shopper enthusiasm, whilst grocery prices jumped 2.3% in the 12 weeks to 26th March, according to Kantar Worldpanel.

At Morrisons and Sainsbury’s, which both report sales on Wednesday, the pace of improvement—if there is one—will need to be faster than high street price rises.

Investors are likely to be more sanguine if there’s any slippage at Morrisons, after its Christmas same-store sales rose at their fastest pace in 7 years, up 2.9%.

At Sainsbury’s however, a faster fall in grocery sales than the 0.5% decline it reported between January and the end of February, is likely to be punished.

Sainsbury’s will also report 2016 earnings. The market is expecting core profits to slump about 5% to £690m, whilst its operating margin is expected to narrow to 2.5% from 3% at the end of March 2016.

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.