Sainsbury's 3rd Quarter Trading Statement

Practical discussions about equity High-Yield Portfolios (HYP) for income
idpickering
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Sainsbury's 3rd Quarter Trading Statement

Postby idpickering » January 11th, 2017, 9:19 am

"· Sainsbury's: Total Retail sales1 up 0.8 per cent (excl. fuel) and like-for-like Retail sales up 0.1 per cent (excl. fuel), with total volumes up and like-for-like volumes flat

· Argos: Total sales up 4.1 per cent and like-for-like sales up 4.0 per cent

· Combined Sainsbury's and Argos like-for-like sales up 1.0 per cent (excl. fuel)

Mike Coupe, Group Chief Executive, said: "Sainsbury's offered customers greater quality food, choice and value than ever before, across all channels. We had a record Christmas week, with over 30 million customer transactions at Sainsbury's and over £1 billion of sales across the Group. Thanks to the commitment of all our colleagues, we delivered an excellent shopping experience and helped our customers live well for less over the festive period.

"Our Groceries Online and Convenience channels performed well, achieving over nine and six per cent sales growth respectively and at Argos we saw record levels of online participation. Online sales made up 18 per cent of total Group sales in the quarter.

"Clothing and General Merchandise also had a very strong quarter, with Clothing sales up ten per cent and General Merchandise up three per cent.

"At Argos we delivered strong growth in the quarter, driven by the key Black Friday and Christmas trading periods. Our Argos digital stores in Sainsbury's supermarkets are performing well, as awareness of the convenience of shopping at both Sainsbury's and Argos under one roof grows among our customers.

"The market remains very competitive and the impact of the devaluation of sterling remains uncertain. However, we are well placed to navigate the external environment and remain focused on delivering our strategy."

http://www.investegate.co.uk/sainsbury- ... 30568875T/

disc - I hold.

blobby
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby blobby » January 11th, 2017, 9:27 am

I'm very pleased with the update. J Sainsbury seem to be weathering the storm OK and even being a little ambitious with Argos and credit cards. I'd say the dividend is safe and long term this is a good business.

idpickering
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby idpickering » January 11th, 2017, 9:55 am

blobby wrote:I'm very pleased with the update. J Sainsbury seem to be weathering the storm OK and even being a little ambitious with Argos and credit cards. I'd say the dividend is safe and long term this is a good business.


I agree blobby. Of the big three, ie SBRY, TSCO and MRW, they'd certainly be my pick. I'm in no rush to top up but may do so in the future and as of now SBRY form 3.6% in capital value of my 24 share HYP.

The market seems to like them also, up 5.5% as I type. Not that we care about that here. ;)

Ian.

Bouleversee
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby Bouleversee » January 11th, 2017, 12:54 pm

Well done, Ian. I have a small holding and had been thinking of topping up and when I heard the news this morning decided to do so but by the time I got round to it the price had gone up a lot and also I noticed that the site I was on was quoting 281.60 bid and 264.40 ask, a spread of 6.11% which put me off completely. What is the usual spread on this share?

Where do you look at prices now? I used to check them out on TMF and study the fundamentals etc. there. It takes too long to log into my brokers so I just googled S'bys share price and clicked on one of the sites that popped up. I presume the stats. are the same wherever you look.

idpickering
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby idpickering » January 11th, 2017, 2:04 pm

Bouleversee wrote:Well done, Ian. I have a small holding and had been thinking of topping up and when I heard the news this morning decided to do so but by the time I got round to it the price had gone up a lot and also I noticed that the site I was on was quoting 281.60 bid and 264.40 ask, a spread of 6.11% which put me off completely. What is the usual spread on this share?

Where do you look at prices now? I used to check them out on TMF and study the fundamentals etc. there. It takes too long to log into my brokers so I just googled S'bys share price and clicked on one of the sites that popped up. I presume the stats. are the same wherever you look.



Hello bouleversee, how nice to see you hereabouts. A belated Happy New Year to you! My SBRY shares were bought in two tranches, one on 2 Mar 2015 @ 270p and then on 22 Apr 2015 @ 267p. So I'm only just breaking even now, but here it's about the divis anyway. :lol:

I use digitallook for all my investigating btw.

Regards,

Ian.

Breelander
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby Breelander » January 11th, 2017, 2:51 pm

Bouleversee wrote: ...the site I was on was quoting 281.60 bid and 264.40 ask, a spread of 6.11% which put me off completely. What is the usual spread on this share?

Where do you look at prices now? I used to check them out on TMF and study the fundamentals etc. there...


You still can... http://www.fool.co.uk/company/?_action= ... r=LSE-SBRY ...but as...
The Motley Fool wrote:This is a solution provided by Digital Look Corporate Solutions incorporating their prices, data, news, charts, fundamentals and investor tools on this site.

...you could cut out the middle-man and go direct to DL: http://www.digitallook.com/equity/Sains ... ndamentals

As for the spread, many brokers let you see their Bid/Ask prices (albeit 15 minutes delayed) without the need to log in. Here's one that shows the spread as currently being about 0.8p
https://www.charles-stanley-direct.co.u ... ol=B019KW7

Gengulphus
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby Gengulphus » January 11th, 2017, 4:07 pm

Bouleversee wrote:Well done, Ian. I have a small holding and had been thinking of topping up and when I heard the news this morning decided to do so but by the time I got round to it the price had gone up a lot and also I noticed that the site I was on was quoting 281.60 bid and 264.40 ask, a spread of 6.11% which put me off completely. What is the usual spread on this share?

Well under 1%, as for all other FTSE 100 shares - so there was definitely something unusual about what you saw!

And there's something else unusual that I don't think you spotted: that bid price (the price at which the market will apparently buy shares from you) was higher than the ask price (the price at which the market will apparently sell shares to you). I.e. the spread wasn't 6.11% - it was -6.11%!

So you appear to have missed a good opportunity: buy shares off the market at 264.4p and immediately sell them at 281.6p, for 17.2p profit per share for as many shares as you could buy... That appearance is of course too good to be true!

So what was going on? The answer is almost certainly an "auction", which is essentially a "time out" period (typically of a few minutes, though they can be extended up to about a quarter of an hour in some circumstances) on the market when orders are accepted by the stockmarket systems (*) but not matched up with each other as usual. Instead, they're just saved up in the system until the end of the auction, and then one big matching-up is done to find the price at which the most orders can be matched (**) - and all the matched orders deal at that price.

The bid price is the highest price at which anyone is willing to buy shares from the market, and the ask price the lowest price at which anyone is willing to sell shares to the market. During normal market operation, orders are matched as soon as possible, i.e. as soon as bid >= ask, and matching the orders takes at least one of them off the market, so the bid is always less than the ask (other than very transiently during the matching process). But that doesn't apply during an auction, and so it's possible for the bid to exceed the ask during an auction - but it isn't an opportunity because you cannot get orders matched during an auction, and all the orders that are matched at the end of the auction deal at the same price. And furthermore, as explained in (*) below, your broker probably won't process orders during an auction.

Auctions happen at the start and close of each trading day, and for some months now, at noon as well. They can also be triggered at other intra-day times while the market is open by the share price moving sufficiently rapidly - so I'd guess you either happened to look during the noon auction or caught one of those other intra-day auctions.

(*) But the set of orders that the stockmarket systems will accept changes during an auction: they'll no longer accept "at best" orders and other types that say they're to be dealt immediately, and they will accept limit orders and "market orders", which are orders to buy or sell at whatever price the auction settles at, with no limit. And because those orders are generally incompatible with broker systems, brokers typically simply won't process orders during an auction. The exceptions are "Direct Market Access" or "DMA" accounts, where the client gives stockmarket orders directly and the broker simply passes them on, and maybe limit orders for some brokers (but most don't put limit orders directly into the stockmarket systems - instead, the broker's own system monitors prices and tries to deal if and when the limit price appears achievable).

(**) If the price is set very high, no orders can be matched because nobody is offering to buy at that price. As the proposed price comes down, the number of people offering to buy at that price or above and so more orders become matchable - until it gets low enough that the limiting factor on the number of orders that can be matched becomes the number of people willing to sell at that price or below. From there on, that limiting factor becomes even more of a restriction on matching orders, and so the number of orders that can be matched drops. I.e. the price at which the most orders can be matched is (as near as possible) the price at which buyers and sellers are in balance with each other - which is why the auction is settled at that price.

Gengulphus

Bouleversee
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby Bouleversee » January 11th, 2017, 4:50 pm

What a mine of information you are, Gengulphus. I can never remember which is which but as I was totally unaware of the scenario you described, even though I did notice a minus sign in front of the difference and the percentage of the spread, I still didn't twig. I suppose that must be what happened the other day when I was trying to buy Horizon Group. Neither of my online brokers would give me an at best price and said I would have to be put in touch with a dealer and set a limit and I set that at 163 and it went through immediately but a minute or so later it was quoting l59, which seemed very suspicious as it had been rising all day. I am still making quite a good profit, though (or at least I was last time I looked) as the price went up quite a bit more in the next few days.

I often used to buy at lunchtime because prices often seemed to drop around then. I assumed it was because most people were at lunch and not many buyers around. I don't understand about auctions at all. All getting too complicated for this old lady. Time to get rid, methinks.

Bouleversee
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby Bouleversee » January 11th, 2017, 5:30 pm

Bree wrote:

"As for the spread, many brokers let you see their Bid/Ask prices (albeit 15 minutes delayed) without the need to log in. Here's one that shows the spread as currently being about 0.8p
https://www.charles-stanley-direct.co.u ... ol=B019KW7"

I went on to Sainsbury's investor site later on and saw the spread was even less than that and at 261.40 was only 3.40 up on the day.

Gengulphus
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby Gengulphus » January 11th, 2017, 11:01 pm

Bouleversee wrote:What a mine of information you are, Gengulphus. I can never remember which is which but as I was totally unaware of the scenario you described, even though I did notice a minus sign in front of the difference and the percentage of the spread, I still didn't twig. I suppose that must be what happened the other day when I was trying to buy Horizon Group. Neither of my online brokers would give me an at best price and said I would have to be put in touch with a dealer and set a limit and I set that at 163 and it went through immediately but a minute or so later it was quoting l59, which seemed very suspicious as it had been rising all day. I am still making quite a good profit, though (or at least I was last time I looked) as the price went up quite a bit more in the next few days.


Sorry, I should have said that I was describing how the London Stock Exchange operates. Other stock exchanges might behave similarly, but I have no knowledge of them - and as using the London Stock Exchange's company search doesn't find Horizon Group, you were probably dealing with one of them... So don't base a "must have been what happened" on what I said!

Bouleversee wrote:I often used to buy at lunchtime because prices often seemed to drop around then. I assumed it was because most people were at lunch and not many buyers around. I don't understand about auctions at all. All getting too complicated for this old lady. Time to get rid, methinks.

Well, understanding precisely what goes on in auctions is complicated - indeed, rather more complicated than my description, as I glossed over a number of details!

But a practical understanding of auctions on the London Stock Exchange for the purpose of ordinary buying and selling is quite simple. All one basically needs to know about them is: they exist and can happen at any time, though noon is now the most likely time you'll encounter them; while they're happening, they stop trading and make the bid and ask prices look rather bizarre; they're over in typically a few minutes and at most about a quarter of an hour.

Gengulphus

Wizard
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby Wizard » January 12th, 2017, 8:15 am

Bouleversee wrote:Well done, Ian. I have a small holding and had been thinking of topping up and when I heard the news this morning decided to do so but by the time I got round to it the price had gone up a lot and also I noticed that the site I was on was quoting 281.60 bid and 264.40 ask, a spread of 6.11% which put me off completely. What is the usual spread on this share?

Where do you look at prices now? I used to check them out on TMF and study the fundamentals etc. there. It takes too long to log into my brokers so I just googled S'bys share price and clicked on one of the sites that popped up. I presume the stats. are the same wherever you look.


Well the 'gloss' rubbed off yesterday and down a bit more this morning, so can be bought for under 260p again.

Terry.

Arborbridge
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby Arborbridge » January 12th, 2017, 9:33 am

Well the 'gloss' rubbed off yesterday and down a bit more this morning, so can be bought for under 260p again.

Terry.


Yes, what fun! A flash in the pan yesterday up to 275, now down to 256.5 to buy- a 7% gyration for a company whose fortunes cannot have change in a day :) Mr Market and his perception of risk changes up and down like the hind leg of a dog.

I'm not tempted at the moment with another year of falling eps and divi forecast and the yield probably still a smidgeon under 4%. BTW, this is one case were looking at the cheerful historic yield give a false sense of security.
I will top up if the price falls enough, but there are companies higher up my buy list at the moment. SBRY is, however, a company I would buy at slightly under my average yield - and I'm confident it will be paying out reasonable dividends for the rest of my lifetime. Buying if and when it is under the cosh is definitely the thing to do with SBRY in my view - as I did in 2014, but unfortunately moved too soon (buying during the down move) except for one tranche which happened after the down move.

The new Argos venture seems to have been popular in our local SBRY, Looks quite neat and there were plenth of people using the facility. In fact, I used it myself for a specific present Mrs Arb requested - first time I've used Argos in probably a decade.

StepOne
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby StepOne » January 12th, 2017, 10:26 am

In capital terms Sainsburys is only the second worst performer in my HYP (after Centrica). In dividend terms, it's technically second worst again, only beaten by BLT's 74% cut last year. But in 'Annoyance' terms it's miles in front - have cut the dividend by 24% in 2015, cut again by 8% in 2016 and forecast to be down again in 2017 by as much as 15% !!!! (measure by dividends received in the calendar year).

StepOne

idpickering
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby idpickering » January 12th, 2017, 11:13 am

StepOne wrote:In capital terms Sainsburys is only the second worst performer in my HYP (after Centrica). In dividend terms, it's technically second worst again, only beaten by BLT's 74% cut last year. But in 'Annoyance' terms it's miles in front - have cut the dividend by 24% in 2015, cut again by 8% in 2016 and forecast to be down again in 2017 by as much as 15% !!!! (measure by dividends received in the calendar year).

StepOne


I'm not tempted to top up my holdings currently, to be honest that's more a case of looking elsewhere currently. However, I will probably add more SBRY in the future I have to admit. And don't even get me started on CNA!! :lol:

Ian.

Arborbridge
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby Arborbridge » January 12th, 2017, 11:58 am

Stepone wrote: But in 'Annoyance' terms it's miles in front - have cut the dividend by 24% in 2015, cut again by 8% in 2016 and forecast to be down again in 2017 by as much as 15% !!!! (measure by dividends received in the calendar year).


A terrible period, but if one has any confidence in the company, it could be argued that that is just the time to start stake building, little by little. Assuming, naturally, that the stake you put down is not too large in comparison with the HYP overall.

Against that, I'll answer for Dod: don't touch supermarkets! Altogether too competitive.

Arb.

idpickering
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby idpickering » January 12th, 2017, 1:53 pm

Arborbridge wrote:
Stepone wrote: But in 'Annoyance' terms it's miles in front - have cut the dividend by 24% in 2015, cut again by 8% in 2016 and forecast to be down again in 2017 by as much as 15% !!!! (measure by dividends received in the calendar year).


A terrible period, but if one has any confidence in the company, it could be argued that that is just the time to start stake building, little by little. Assuming, naturally, that the stake you put down is not too large in comparison with the HYP overall.

Against that, I'll answer for Dod: don't touch supermarkets! Altogether too competitive.

Arb.


Afternoon Arb, I do get where you're coming from, but as I mentioned before, I think SBRY are the best of the 'big three'. They offer diversification to my HYP and a decent yield. The ups and downs in the SP I can live with, as long as they keep paying a rising dividend then that'll do for me.

Regards,

Ian.

Bouleversee
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby Bouleversee » January 12th, 2017, 2:08 pm

Gengulphus wrote:

Bouleversee wrote:
What a mine of information you are, Gengulphus. I can never remember which is which but as I was totally unaware of the scenario you described, even though I did notice a minus sign in front of the difference and the percentage of the spread, I still didn't twig. I suppose that must be what happened the other day when I was trying to buy Horizon Group. Neither of my online brokers would give me an at best price and said I would have to be put in touch with a dealer and set a limit and I set that at 163 and it went through immediately but a minute or so later it was quoting l59, which seemed very suspicious as it had been rising all day. I am still making quite a good profit, though (or at least I was last time I looked) as the price went up quite a bit more in the next few days.


Sorry, I should have said that I was describing how the London Stock Exchange operates. Other stock exchanges might behave similarly, but I have no knowledge of them - and as using the London Stock Exchange's company search doesn't find Horizon Group, you were probably dealing with one of them... So don't base a "must have been what happened" on what I said! "


Apologies, Geng. It's Horizon Discovery Group which is LSE but on the AIM register, though you'd never know the latter from the contract note, which imo is an omission. Actually, thinking about the complexities of IHT, I think it would be useful if one's portfolio list at brokers indicated which were AIM shares to alert heirs to check whether IHT is payable on them. Horizon's qualifies for the exemption, after 2 yrs ownership,of course.
Last edited by tjh290633 on January 12th, 2017, 6:08 pm, edited 1 time in total.
Reason: Quote tags inserted TJH

Arborbridge
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby Arborbridge » January 12th, 2017, 2:32 pm

Ian wrote: as long as they keep paying a rising dividend then that'll do for me.


Ian, the problem is that they haven't been paying a rising income but a falling one. On balance, I'm inclined to believe the income will begin to rise again in a couple of years' time - however, some people would reject SBRY on this ground alone. So, to me it's either a "hold" or a "buy if you are willing to speculate on good times returning". A yield of 4% on a new purchases probably doesn't compensate for the wait, which is why I would only add small amounts, if at all, at present.

Dod, would take a harder line and say "no way!"

blobby
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby blobby » January 12th, 2017, 3:00 pm

It is worth reminding ourselves what the J Sainsbury dividend policy is. They said in the last annual report:

Sainsbury Annual Report 2015 wrote:We are also committed to ensuring we pay an affordable dividend and are fixing our dividend policy to two times cover over the next three years.


So with the last year at 12.1p, it means that the next dividend depends entirely on the profits this year. This is different to most HYP companies who are reluctant to make any change to the dividend unless it it upwards. I can see how this is less attractive to some wanting a steady income stream, however I can also see why J Sainsbury have argued that for 3 years they want to be less restricted.

I'd say that judging by the results so far this year, the earnings per share should be broadly the same for this full year. However the financial strength of J Sainsbury in terms of asset value and dividend cover seems superior to most HYP offerings at the moment.

With my forecast of similar earnings as above the yield at £2.58 is 4.7%. With Sainsbury holding its own in market share I'd like to think that there are better times ahead.

Arborbridge
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Re: Sainsbury's 3rd Quarter Trading Statement

Postby Arborbridge » January 12th, 2017, 3:17 pm

With my forecast of similar earnings as above the yield at £2.58 is 4.7%.


Well, Mr Blobby, I wish I had the confidence to make my own forecasts. I wouldn't presume to have more information than the various brokers who are forecasting a cut in eps. How could I?

Incidentally, the statement on dividend being determined by the cover, seems eminently sensible to me. I wouldn't want a company to pay out too much, perhaps borrowing to do so. The obsession with rising dividends encourages some directors to take more risk than they should.


Arb.


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