Shares of the UK-based J Sainsbury PLC (GB:SBRY) fell over 3% as of writing despite the company reporting record sales for the Christmas season. The company’s grocery as well as the total sales increased by 3.8% during the Christmas period, marking the company’s fifth consecutive year of gaining grocery market share. However, the investors remained cautious due to the weaker performance in non-grocery segments and margin pressures.
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Sainsbury’s is a prominent supermarket chain in the UK, with operations in both physical stores and online platforms. Its portfolio includes well-known brands such as Argos, Nectar, Habitat, and Tu.
Sainsbury’s Grocery Growth Outshines Weak Non-Grocery Sales
In the third quarter, Sainsbury’slike-for-like sales, excluding fuel, grew by 2.8% during the 16-weeks ending January 4, with grocery sales contributing to a 4.1% increase. On the other hand, Sainsbury’s general merchandise and clothing sales decreased by 0.1%, while Argos sales fell by 1.4% compared to the previous year.
For the full fiscal year 2024/25, Sainsbury’s projects its Retail underlying operating profit to fall between £1.01 billion and £1.06 billion, representing a growth of around 7% over FY23/24. The company also aims to generate a minimum of £500 million in free cash flow from its Retail operations.
Furthermore, it raised its financial services profit forecast to £30 million, up from the previous guidance of £15 million to £25 million.
Is Sainsbury’s a Good Share to Buy?
On TipRanks, SBRY stock has been assigned a Strong Buy rating based on seven Buy and two Hold recommendations. The Sainsbury share price target is 317.11p, which is 25% above the current trading level.
