Shares of UK-based J Sainsbury PLC (GB:SBRY) dropped after its top shareholder, the Qatar Investment Authority (QIA), announced plans to sell $400 million worth of stock in the supermarket chain. After this transaction, QIA’s stake in Sainsbury’s will reduce to around 5% from 14.2%.
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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 Faces Share Sale from QIA
Qatar’s sovereign wealth fund QIA is offloading 109 million shares for £2.80 each, amounting to a total of £306 million. The offer price marks a discount of 2.8% on Sainsbury’s closing price on Thursday.
Qatar made its initial investment in Sainsbury’s in 2007, marking one of its earliest investments in the UK. It also withdrew a potential takeover bid for the supermarket chain that same year.
Qatar’s recent share sale happened during a busy time for large trades in Europe, as investors seek to capitalize on rising stock prices before the upcoming US presidential election and earnings season. Meanwhile, QIA holds several prominent UK investments, such as a stake in British Airways owner International Consolidated Airlines Group SA (GB:IAG) and ownership of British luxury store Harrods.
Recap of Sainsbury’s Q1 Performance
According to Sainsbury’s Q1 update, overall retail sales (excluding fuel) rose 2.6%, largely due to a 4.8% increase in grocery sales. On the other hand, sales of general merchandise and clothing fell 4.3%.
Moving forward, the company is optimistic about its grocery performance due to strong volume growth amid slowing inflation in the UK. For the full Fiscal Year 2024/25, Sainsbury’s expects its retail underlying operating profit to be between £1.01 billion and £1.06 billion, indicating a 5-10% increase from FY23/24.
Is Sainsbury’s a Good Stock to Buy?
On TipRanks, SBRY stock has been assigned a Moderate Buy rating based on three Buys and one Sell recommendations. The Sainsbury share price target of 322.50p is 18.6% above the current trading level.
