Sector movers: Grocers down as analysts warn of price war

6th Oct 2014 14:01

Retailers led to the downside on Friday and were clearly the main focus for traders as the negative news surrounding the sector continued to pour in, even as the share price losses continued to snow-ball.The fundamental force behind the above would seem to be the heightened competitive pressures in the sector, with financial markets sprinting to price these into the respective companies' stock prices.Morrison Supermarkets was again one of the main triggers of the selling pressure after the latest data from market research firm Nielsen showed that sales declined 2.2% in the 12 weeks to 13 September, cutting the firm's market share to 11% from 11.2%.J Sainsbury also slumped as analysts at Barclays moved to cut their price target for the supermarket operator by 18% to 300p, saying they expect weak second-quarter sales.As if on cue, The Times reported that Sainsbury's customers will no longer receive money-back vouchers if they could find the same branded goods at a cheaper price at rival chain Tesco.Rather, the London-based chain said it will now match its prices against Asda, the cheapest of the four main supermarket chains in the UK, a decision which is set to unleash a "supermarket war", according to City analysts.Sainsbury's is expected to report a sales downturn of about 4% next week even as it braces itself for potentially drastic price cuts from Tesco, which is desperate to win back customers after a tumultuous 2014.Acting as a backdrop, Sports Direct shares slumped into the red one day after its boss, Mike Ashley, surprised London's financial community with the news it has completed a "put" option with Goldman Sachs in a complicated move that it said "reflects Sports Direct's growing relationship with Tesco and belief in Tesco's long-term future". The option relates to 23m Tesco shares.In parallel, Tesco's former finance director, Laurie McIlwee will receive a £1m farewell payoff next week, despite the latest scandal surrounding the retail giant, The Guardian reported.McIlwee, who left Tesco in April and was told to stay away from the office, will receive his payoff as stipulated in his contract, even though he received over £400,000 during the six months after his resignation.That newspaper report came amid market chatter that Tesco was set to receive ownership of a new $50m Gulfstream 550 corporate jet.