Shore Capital reiterates 'sell' on Sainsbury

7th Jan 2015 11:02

Sainsbury on Wednesday published better than expected sales figures for the third quarter but Shore Capital has reiterated selling shares in the grocer amid fierce competition. The grocery giant saw its like-for-like sales drop by 1.7%, which was comfortably ahead of the 3.2% fall which the consensus had been forecasting.Commenting on the company's trading update, analyst Clive Black at Shore Capital highlighted the very strong sales growth rate (+16%) achieved by the firm's convenience division. The clothing segment, in particular, which saw sales rise by 10%, put in a "commendable" performance, Black said.The company's online business, on the other hand, only achieved growth of approximately 6%."Such a performance is far from stellar and well behind admittedly less mature Waitrose.com (John Lewis Partnership) and Ocado," the broker explained in a research note e-mailed to clients.The latter, for example, reported 14% growth to the end of November 2014.Significantly, Shore Capital emphasised how Sainsbury is in a very difficult competitive situation, caught in the middle as it is between the market leader, Tesco, which is attempting to get its act together, while at the same time losing share to the growing premium retailers such as Marks&Spencer or Waitrose.For all of the above reasons Shore Capital reiterated its 'sell' recommendation.