Wednesday preview: Sainsbury set to embarrass Tesco

Sainsbury, once king of the hill in the UK grocery market, is set to embarrass the current market leader, Tesco, when it issues a trading update on Wednesday.

While earlier this week Tesco tried to put a brave face on a 1.5% decline in like-for-like sales (excluding VAT and petrol) in the UK, Sainsbury is set to announce LFL sales growth of around 2% for the 12 weeks to early-June.

True, Sainsbury's trading update will, unlike Tesco's, include the extended bank holiday week-end, and the growth rate does represent a slow-down from 2.6% seen in the preceding quarter, but those are still numbers to cause unease and envy in the Tesco board room.

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"We expect new space growth to contribute a further 2.2% to the top line," revealed broker Panmure Gordon.

It is not just Tesco that should be worried, according to Panmure Gordon. Online grocer Ocado should also have the heartburn lozenges close to hand.

"We expect that groceries online will have grown by 20% and sales are both growing faster and are also now higher than Ocado's," the broker suggested.

Panmure Gordon believes that Sainsbury continues to be underestimated by the market, which had been worried about the chain carrying on with its land grab policy. The retailer, which signalled its intent on Tuesday to get more involved in the online digital entertainment market with the acquisition of a majority stake in online electronic book seller Anobii, has followed Tesco's lead in cutting back on expansion plans for its bricks and mortar estate.

"Having pushed through significant expansion, most [supermarket] operators need to repair both balance sheets and returns over the next few years. We remain bullish about the long term prospects for the sector: rising population and increased concern about diet, provenance etc., should lead to a continuation of the recent uptick in food as a proportion of consumer expenditure," the broker concluded.

Also on the agenda on Wednesday is the annual general meeting of advertising conglomerate WPP, at which a protest vote against the pay package of founder and chief executive Sir Martin Sorrell could be in the offing.

Sir Martin Sorrell is set to get paid £6.8 million this year, a 60% increase on last year's package. Sorrell's argument is that he is being justly rewarded for "performance, not failure," while the likes of pressure groups such as the Association of British Insurers (ABI) and Pensions investment Research Consultants (PIRC) have urged their members not to vote in favour of what they regard as an excessive remuneration package.

As is the way of these votes, even if 100% of the votes are against the pay package, WPP is under no obligation to make any changes to the pay award. In most cases there would certainly be pressure on the company to promise to review its pay policies in the future but with WPP being run, in the view of some, as a personal fiefdom of Sir Martin Sorrell, that may not happen in this case.

INTERIM EX-DIVIDEND DATE

Bank of Georgia Holdings, Shaftesbury, Sherborne Investors (Guernsey) 'A' Shares, Topps Tiles, WH Smith

QUARTERLY PAYMENT DATE

Unilever

QUARTERLY EX-DIVIDEND DATE

XP Power Ltd. (DI)

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Business Inventories (US) (13:30)

Consumer Price Index (GER) (07:00)

Crude Oil Inventories (US) (15:30)

Industrial Production (EU) (10:00)

Manufacturing Inventories (US) (15:00)

MBA Mortgage Applications (US) (12:00)

Producer Price Index (US) (13:30)

Retail Sales (US) (13:45)

Retail Sales Inventories (US) (15:15)

GMS

Blue Planet International Financials Investment Trust, Bullabulling Gold Limited (DI)

FINALS

Advanced Computer Software Group, Creston, Hyder Consulting, Sepura

IMSS

Spirit Pub Company

AGMS

Antofagasta, Christie Group, Dexion Absolute Ltd. GBP Shares, Dexion Equity Alternative Ltd., Diamond Circle Capital, Flying Brands Ltd Units, LiDCO Group, London Security, Mariana Resources Ltd., Matrix Income & Growth 4 VCT, Metals Exploration, Networkers International, Polymetal International, President Petroleum Co, Severfield-Rowen, Soco International, Source BioScience, WPP

TRADING ANNOUNCEMENTS

Sainsbury (J)

FINAL DIVIDEND PAYMENT DATE

Centrica

FINAL EX-DIVIDEND DATE

Acal, Aegis Group, Alliance Pharma, Amiad Water Systems Ltd, Ashley (Laura) Holding, Camellia, Densitron Technologies, Edinburgh Inv Trust, Empresaria Group, Hargreave Hale AIM VCT 2, Investec Structured Products Calculus VCT, Investec Structured Products Calculus VCT 'C' Shares, London & Stamford Property , Mears Group, Prezzo, Prime People, Printing.com, RIT Capital Partners, Speedy Hire, Tribal Group, Vertu Motors

JH