Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a1075023

Supermarkets top FTSE as Goldman turns bullish

Tesco, Sainsbury's and Morrisons jump to top of FTSE 100 as Goldman Sachs says margin pressure is easing.

 
Supermarkets top FTSE as Goldman turns bullish

Supermarkets have jumped to the top of the FTSE 100 after Goldman Sachs analysts turned bullish on the sector, arguing margin pressure was showing sings of easing.

Tesco (TSCO) topped the FTSE 100, up 3.8% at 202.6p after Goldman Sachs switched its rating on the stock to 'buy' from 'sell'.

The analysts argued the supermarket would continue to take market share in 2018, while reinvesting less of its cost savings in the business.

'This should drive greater margin expansion than we forecast before,' they said, according to Reuters.

Morrisons (MRW) meanwhile rose 2.7% to 219.7p as the analysts upped their rating to 'neutral', while Sainsbury's (SBRY) was up 2.9% at 239.8p after a target price increase.

The FTSE 100 was trading just a single point higher at 7,340, despite the boost from a weak pound, down 0.4% against the dollar at $1.342, as prime minister Theresa May yesterday failed to clinch a deal over the treatment of Northern Ireland under Brexit.

On the FTSE 250, Provident Financial (PFG) was the heaviest faller, down 10.6% at 787p after announcing the Financial Conduct Authority was investigating its Moneybarn car and van financing division.

4 comments so far. Why not have your say?

trieze

Dec 05, 2017 at 17:54

It would seem Goldman Sachs do not do the weekly shopping. If they did they would see the public turning to Aldi & Lidl [opening 100s more stores in uk] also B&M, Heron, Farm Foods and several other cheaper alternatives whose queues at the checkouts are noticeably longer than in the past. Our grocery shopping only involves going to the major supermarkets for favourite items we cannot get at the previously mentioned.

report this

Roger Savage

Dec 05, 2017 at 19:38

The alternatives you mention *can* be cheaper and interesting / different / sometimes better items *can* be found.

However, the overall shopping experience (including online) and breadth of products on sale cannot come close to the offering of the major supermarkets. Aldi and Lidl internally look a lot like Fine Fare did in the '80s.

The savings at the German stores aren't that incredible either compared with a (savvy) shop at the majors.

Factor in reduced price offers (hardly ever found at the German stores) and hidden benefits such as loyalty benefits / cards and the price difference isn't that great at all.

If you know how much to pay for goods then you can play them all at their own game.

However, oft touted the 30-40% difference over the majors on an average shopping basket at Aldi or Lidl is total fantasy.

Judging by my local Aldi (which I do like), the reason the queues at the checkouts are long is because they have a limited number of tills open at any one time.

report this

Peter in Cornwall

Dec 05, 2017 at 22:38

Sorry Roger Savage but your bold assertions are not borne out in my immediate locality where ASDA, Sainsbury and LIDL are the principal players. ASDA is starting to approach ghost town territory with a limited number humans on checkouts which roughly equates to the number on LIDL's tills where the store and car park is rammed. Sainsbury continues but with a car park and footfall indicators suggesting a slow decline.

report this

trieze

Dec 06, 2017 at 15:22

Sorry again Roger Savage. Granted the range of products are better in the majors but while we like other shoppers are in the minor stores, picking up branded baked beans, soup, frozen veg. and many other 30-50% reductions we also pick up the bread and butter items [literally] from the minors. Funny you should mention Fine Fare I was a manager in a London branch in the '70s. It seemed like a big store then.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire Guide to Investment Trusts


In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.

Watch Now

More about this:

Look up the shares

  • Tesco PLC (TSCO.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • WM Morrison Supermarkets PLC (MRW.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • J Sainsbury PLC (SBRY.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Provident Financial PLC (PFG.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Read more...

Flashing red lights? Most managers don't think so

by Daniel Grote on Dec 08, 2017 at 14:39

Sorry, this link is not
quite ready yet