Among key news on UK stocks, J Sainsbury PLC (GB:SBRY) shares fell by 1.7%, as of writing, following the release of a mixed trading update for the 16-week period that ended on June 22. In the first quarter of FY24/25, the company’s total Retail sales (excluding fuel) increased by 2.6%, driven by a 4.8% rise in grocery sales. However, sales of general merchandise and clothing declined by 4.3%, and Argos sales dropped by 6.2%.
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Sainsbury’s is a leading supermarket chain in the UK, operating in both offline and online formats. The company’s brands include Argos, Nectar, Habitat, and Tu.
Sainsbury’s Optimism on Grocery Growth
Sainsbury’s is optimistic about its performance in the Grocery segment. The company highlighted the strong volume growth in this category, especially amid slowing inflation in the UK. Additionally, the company has been outperforming its competitors for 15 consecutive months, as more customers choose Sainsbury’s for their primary shopping needs. On the flip side, Sainsbury’s clothing performance was hit by weak seasonal sales.
For the full-year Fiscal 2024/25, Sainsbury’s expects its Retail underlying operating profit in the range of £1.01 billion to £1.06 billion, reflecting growth of 5% to 10% compared to the prior year. Additionally, the company aims to generate at least £500 million of free cash flow in Retail.
The company also started its previously announced buyback programme for £200 million. This is expected to be completed in FY24/25.
Is Sainsbury’s a Good Share to Buy?
On TipRanks, SBRY stock has been assigned a Moderate Buy rating based on three Buys, two Holds, and one Sell recommendation. The Sainsbury share price target of 307.20p is 21% above the current trading level.
