Broker snap: Sainsbury's growth to slacken in 2011

18th Mar 2011 11:08

Although supermarket giant Sainsbury is still leading the pack in terms of sales growth, Nomura lowers its forecasts, saying that the 2011 calendar year is increasingly likely to be a low growth period for the UK grocery market.The Japanese broker expects the group to post a fourth quarter like-for-like (LfL) growth (ex-fuel, VAT-inclusive) of 1.5%, from a 3.6% increase in the third, "reflecting a low growth grocery market since Christmas, and the travails of the UK consumer," says analyst Nick Coulter.Even though the impact of new space on sales is estimated to tick up to 2.5% for the quarter, full-year LfL forecasts are lowered from 3% to 2.3%, and pre-tax profit is cut by £5m to £665m. Sainsbury's growth rates have moderated but still remain ahead of its peers, says Nomura. However, with lower growth to resonate down to slower LfL improvement in the current year and the next, the Japanese broker keeps its 'neutral' rating and cuts the target price from 380p to 365p.