Grocers face negative like-for-like food volumes for the remainder of the year after a torrid first half when the only uptick came in April with the royal wedding and Easter.
Shore Capital analyst Clive Black said that following lower like-for-like volumes in five out of the first six months of the year, grocers must be behind on budget.
He said: “We have spoken to several leading figures in UK food retail and they’ve never witnessed a period of negative food volumes on such a sustained basis.”
He said with the pressure on household spend leading to changing buying habits so consumers waste less, the first half was “below the worst of expectations and we see little likelihood of a rebound in the second half”.
As a result, Black has downgraded the grocers. Sainsbury’s is “our prime concern” he said. “Sainsbury has gone from market outperformer to underperformer in a reasonably converged sector this year, despite opening more space than its peers in percentage terms.”
He has cut its 2011/12 current pre-tax profit estimate by £48m, or 7%, to £699m. Sainsbury’s market share was static at 16.1% in the Kantar figures for the 12 weeks ending July 10. He said that Sainsbury’s is “not alone”.
Black’s Tesco profit forecast has been downgraded by 1.4% and Morrisons by 2.5%. He said the downgrades came as Morrisons is delivering several self-help initiatives and Tesco has a diverse offer including international and retailing services.
The latest Kantar figures showed Morrisons emerged the fastest growing of the big four, with growth of 5.6% increasing share from 11.8% to 11.9%.
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