Sainsbury, Tesco: Should you consider buying these stocks now?

Be the First to Comment Read

Sainsbury, Tesco: Should you consider buying these stocks now?

 Sainsbury, Tesco: Should you consider buying these stocks now?
Image source: Contributor,shutterstock.com

Highlights

  • The UK’s fourth-largest supermarket said on Monday to help customers with the rising inflationary pressure it has decided to reduce prices on over 500 products.
  • According to data analytics company Kantar, the cost of groceries is now 5.2% over the four weeks to March 20, the highest level since April 2012.

UK’s fourth-largest supermarket Morrison Supermarkets Plc on Monday said that with the rising inflationary pressure, rising costs, it has decided to reduce prices on over 500 products, including eggs and beef in order to help customers

The move came after the grocers, such as Tesco, Asda, and Sainsbury’s, together known as Big Four announced reductions in prices as shoppers are increasingly turning to cheaper own-brand products. According to data analytics company Kantar, the cost of groceries is now 5.2% over the four weeks to March 20, the highest level since April 2012.

The cost of groceries is now 5.2% over the four weeks to March 20, the highest level since April 2012

2022 Kalkine Media®

The UK’s grocers are under threat from discount supermarket chains Aldi and Lidl said the price cuts were in essential items, such as rice, coffee, eggs, bread, baked beans, sausage, and refrigerated, frozen, and store cupboard food, meat, and cereals, offering an average saving of 13% to customers.

Also read: Vivo Energy, Fraser: Stocks to eye amid falling consumer confidence

According to industry data, Morrison, which is owned by US private equity firm Clayton, Dubilier & Rice, hasn’t performed well in the recent months due to rising prices. The supermarket group has introduced new multi save promotions, such as two boxes of cereal for £1.8, buy two for £3 on breaded chicken, 30 packs of own-brand eggs for £2.99, and 430g pack of diced beef for £3.59, and a compare & save campaign to help provide shoppers with more benefits that can be made by swapping branded items for Morrisons’ own-brand products.  

Also read: OCDO, SBRY, MKS: Supermarket stocks to watch amid rising food prices

The UK’s inflation rate in March hit a 30-year high of 7%, meanwhile UK consumer confidence slumped to its lowest level since records began. Asda and Morrison were the worst hit as shoppers turned to discounters to cut their costs. The Bradford-headquartered supermarket saw sales drop 11.5% in the last three years, Kantar highlighted.

Let us look at the share performance of the two FTSE-listed Supermarket stocks that have recently decided to cut their prices.

Tesco Plc (LON: TSCO)

The leading multinational groceries and general merchandise retailer reported an increase in adjusted operating profit by 35.85% to £2.65 billion in 2021-22 from the retail business and has forecasted that the retail adjusted operating profit to be between £2.4 billion and £2.6 billion due to rising uncertainties in the external environment.

With a market cap of £20,252.22 million, the FTSE 100-listed company’s share value appreciated by 18.49% over the last one year as of 25 April 2022, while its year-to-date return stands at -8.89. Tesco Plc’s shares were trading at GBX 264.10, down by 0.57% at 8:20 AM (GMT), as of 25 April 2022.

Also Read: Tesco, Premier Foods: Should you invest in these food stocks now?

J Sainsbury Plc (LON: SBRY)

J Sainsbury Plc is the second largest company with chains of stores and supermarkets across the UK.  With a market cap of £5,624.29 million, the FTSE 100 listed company’s share value depreciated by -2.23% over the last one year as of 25 April 2022, while its year-to-date return stands at -14.14. J Sainsbury Plc’s shares were trading at GBX 237.80, down by 1.33% at 8:20 AM (GMT), as of 25 April 2022.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

Disclaimer

Speak your Mind

Featured Articles