The J Sainsbury plc (LON:SBRY) (LSE:SBRY.L) share price has fallen 1.9% so far today after it released Q4 results to the stock market. Its shares may benefit in my view from a rise in combined Sainsbury’s and Argos LFL sales growth of 0.3% (excluding fuel).
However, the performance of Sainsbury’s (excluding Argos) was less impressive in my opinion. Its total retail sales were up 0.1% excluding fuel, with LFL retail sales down 0.5% excluding fuel. This compares to Argos, where total sales were 3.8% higher and LFL sales were 4.3% up.
In my opinion, Sainsbury’s share price could be pushed higher through the company’s investment in digital. It is seeking to deliver enhancements to the Argos website and app, which may improve higher service levels and the availability of products to customers.
Sainsbury’s share price may also be catalysed by its clothing sales. Its Tu clothing brand again performed ahead of the market in Q4, with sales up over 5%. Additionally, Sainsbury’s Bank continues to deliver good growth and its personal loan offers sold relatively well in a competitive environment.
Today’s update from Sainsbury’s also discusses how competitive the markets in which it operates remain. The impact of cost price pressures remains uncertain.
In the last year, Sainsbury’s share price has dropped 5%. This is a worse performance than the share prices of other consumer stocks such as Tesco PLC (LON:TSCO) (LSE:TSCO.L), WM Morrison Supermarkets PLC (LON:MRW) (LSE:MRW.L), Unilever plc (LON:ULVR) (LSE:ULVR.L) and Whitbread plc (LON:WTB) (LSE:WTB.L). Unilever’s share price is up 30%, Whitbread is trading 3% higher, Tesco is flat and Morrisons share price is 20% firmer.
In my view, Sainsbury’s faces a challenging outlook. I think the integration of Argos could help to improve its overall performance, but I also feel consumer discretionary items may experience lower demand if inflation moves higher than wage growth. Therefore, I’d rather buy Tesco or Morrisons within the supermarket sector, while I think Whitbread and Unilever’s international offering may lead to better share price performance than for Sainsbury’s in the long run.