The supermarket said it expects profit before tax for the full year to be “moderately ahead of published consensus” off the back of its “record sales” period over Christmas.
Total retail sales over the third quarter, excluding fuel, rose 1.2%, driven by healthy grocery sales and its burgeoning online business.
More than 340,000 grocery orders were placed online during the busy Christmas period with online orders accounting for a fifth of the group’s total sales.
Mike Coupe, the firm’s chief executive officer commented: “While market conditions remain challenging and we are cautious about the consumer environment in the year ahead, we now expect to achieve £80m-£85m of EBITDA (£72m-£77m EBIT) synergies from the Argos acquisition by March 2018, ahead of our previous guidance of £65m EBITDA (£58m EBIT).”
Sainsbury’s shares were up marginally following the news, trading 1.6% higher at £2.53 at the time of writing.
“Sainsbury’s third quarter trading update has followed the theme of better results amongst the large supermarkets of late,” noted Helal Miah, investment research analyst at The Share Centre, adding investors should be particularly pleased by the firm’s outperformance in the “challenging” general merchandising and clothing space part of the retail space.
However, due to intense competition from German discounters Aldi and Lidl, it is “unlikely that margins will improve to anything near past levels,” he said.
Burford Capital
Meanwhile, AIM-listed Burford Capital, which is majority owned by Mark Barnett of Invesco Perpetual and Neil Woodford, saw its shares take off after reporting “strong growth” in its new investment commitments, ahead of its full year results.
The global firm specialises in providing financial insights to the legal market. Currently, Barnett owns a 22.72% in the firm, while Woodford holds a 9.95% stake.
Christopher Bogart, Burford’s chief executive officer, said in a statement that “the new commitments made during the year have the potential to generate significant future income in the years to come and reflect a robust legal finance market that Burford continues to lead”.
In 2017, Burford made $1.3bn in new commitments to strengthen various areas of its offering, more than triple the investments it made in 2016.
It funnelled over $725.5m of its balance sheet and fund commitments to its portfolio finance arm and circa $475.3m to its recourse finance capabilities. Other areas of investment were single case finance and legal risk management.
Its shares were up close to 5% at £11.59 at the time of writing.
Burford Capital will release its final results on 14 March 2018.
