Analysts hope Sainsbury’s has turned corner

INVESTORS will tomorrow turn their focus to Sainsbury’s’ first quarter trading update to see how shoppers are reacting to the impact of food inflation amid the cost of living crisis.

The supermarket is expected to post a jump in revenues driven by higher sales over the quarter to June. Analysts at Shore and UBS told PA they expect Sainsbury’s to reveal sales growth of nine per cent which could provide “reason for optimism”. However, shareholders will also be keen to see how higher costs are impacting the grocer's profit margins, with the supermarket having already warned shareholders that annual profits for this year are expected to be dented by the brand's investment in keeping prices low amid sky high food inflation.

Food inflation fell to 14.6 per cent this month, down from 15.4 per cent in May, figures from the British Retail Consortium show.

Last week, the brand unveiled £15m worth of price cuts, following claims that ‘Big Four’ supermarkets were profiteering from the cost of living crisis — a claim Sainsbury’s has rebuffed.

In April, the grocery reported lower annual profits for last year despite a 5.3 per cent uptake in sales, as chief Simon Roberts revealed it spent over £500m on cutting prices for consumers.

Analysts at AJ Bell said shareholders would be keen for insight on “costs, pricing and volumes, especially if there is any evidence that customers are trading down to cheaper brands or cutting out some purchases altogether”.

“Tesco’s first-quarter trading statement in June featured warnings to this effect and disappointed the market,” they added.