The market was none too enthused on Monday with the Christmas trading update from supermarket group Morrisons and on Wednesday it is the turn of rival Sainsbury to march to the crease when it publishes a fiscal third quarter update. Nomura Securities thinks the UK's number three supermarket chain will have made a better fist of trading over the Christmas than its peers.
It is predicting like-for-like (LFL) sales (excluding fuel) growth of 2.0% year-on-year in the 14 weeks to January 7th. With value added tax (VAT) stripped out, that growth figure falls to 1.0%. If the Japanese broker is right, then that would represent an acceleration in LFL sales growth from the previous quarter, when the supermarket notched up year-on-year growth of 1.9%.
"Against the backdrop of sharper prices from both Tesco and Asda, we expect Sainsbury to have traded well across the period, capitalising on its traditional strength in events and Christmas in particular. A growing non-food presence (partly via extensions) and its positioning as the premium mass market player will have helped across the peak period, but with the latter likely to represent a headwind across calendar 2012," Nomura said.
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JPMorgan Chase is a bit more conservative in its prediction of LFL sales growth, going for 1.8%.
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Credit Suisse responded to the warning by reducing its 2011 and 2012 earnings estimates by 10% and 28% respectively, and hinted that further downgrades could be coming down the road. "Our estimates are based on an underlying assumption of a European recession but see the potential for significant further downside if the challenges in the Eurozone drag the global economy into recession," the Swiss bank said.
"We forecast full year gross profit of £546m and pre-tax profit of £85m," Credit Suisse added.
On the economic front, economists have used a red pencil to record their forecast of a UK goods trade deficit of £8.35bn for November, which is even worse than the October deficit of £7.57bn.
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