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Highlights
- Grocery prices in the United Kingdom rose by 3.5% in the last month of 2021, the sharpest price increases since January 2018.
- In the festival season consumers spent more on Christmas treats that led to total grocery sales for the four weeks to 26 December period surging to £11.7 billion.
Grocery prices in the United Kingdom rose sharply by 3.5% in the last month of 2021. Consequently, the monthly grocery bill of shoppers witnessed an increase of £15 on an average, according to a new survey by Kantar. Savoury snacks, beef & meat products, and skincare reported a sharp rise in prices.
The total grocery sales rose to £11.7 billion in the four weeks to 26 December despite the sharpest price rise since January 2018, mainly due to the festival season. Moreover, the supermarket witnessed a larger number of shoppers returning to in-store shopping in December despite the rapid spread of the Omicron variant. As a result, online grocery sales fell by 3.7% during the period.
Higher grocery sales and the return of shoppers in large numbers is a positive sign for the industry and might benefit the supermarket chains in upcoming quarters.
© 2022 Kalkine Media®
Let us look at FTSE listed supermarket chain stocks and their investment prospects:
Tesco Plc (LON: TSCO)
FTSE100 listed supermarket chain operator has the largest market share in the UK and maintained its dominance in the supermarket segment.
The company reported a 6.3% rise in revenue at £30,416 million on a constant currency basis, while its adjusted operating profit was at £1,458 million for the 26 weeks ended 28 August 2021. The company has updated its full-year profit expectation following an excellent performance.
The operating profit is now expected to be between £2.5bn and £2.6bn. Moreover, the company has also announced an interim dividend of 3.2p per share for its shareholders.
Tesco Plc currently trades at GBX 296.30, down by 0.14% on 06 January 2022 at 09:05 am GMT+1, with a market cap of £22,747 million.
J Sainsbury Plc (LON: SBRY)
The company operates a supermarket retail chain in the UK and Ireland. It manages over 598 supermarkets and 813 convenience stores.
Sainsbury’s business performance was in line with the recovery in the retail industry, which resulted in market share gain during the 28 weeks ended 18 September 2021. It reported solid growth in digital and general merchandise sales driven by innovation and services.
J Sainsbury Plc currently trades at GBX 284.10, up by 1.54% on 06 January 2022 at 09:05 am GMT+1, with a market cap of £6,527 million.
OCADO Group Plc (LON: OCDO)
Ocado Retail Ltd, a joint venture between Ocado Group and Marks & Spencer Group, sells general merchandise and grocery products.
Ocado reported retail revenue of £547.8 million during the 13 weeks to 28 November 2021. Strong consumer acquisitions, increased investment, and hopes for an increase in capacity are expected to deliver solid sales growth in 2022 as per an early estimate by the management.
OCADO Group Plc currently trades at GBX 1,561.50, down by 2.34% on 06 January 2022 at 09:05 am GMT+1, with a market cap of £12,065 million.
