Investors will be bracing themselves for bad news in the next two weeks as three major food retailers prepare to release trading updates.
Marks and Spencer and the Big Food Group will release their second-quarter trading figures on Tuesday and Wednesday respectively
And Sainsbury’s chief executive Justin King is set to report to the City on October 19. King is now under pressure to explain how he plans to turn around the retailer’s fortunes.
BFG is preparing its statement while Bauger, its biggest shareholder, is conducting due diligence over a possible takeover bid.
Food industry rumours this week suggested its bid would be reduced from 110p per share to
100p and that there were plans to sell off up to 250 Iceland stores to cash in on current high prices in the market.
Jonathan Pitkänen at Fitch Ratings does not predict positive results for either BFG or M& S.
He said: “With the Big Food Group, like-for-like sales will continue to be poor and obviously that is going to feed through to the bottom line. “
Regarding Marks and Spencer, he said: “There will be a significant drop in sales and profit in both clothing and food. Food was fantastic for them but in the last six to nine months it has run into problems.”
Sainsbury problems were further compounded by this week’s news that finance director Roger Matthews will be leaving in March, while property director Desmond Taljaard leaves next month.
In all, seven main board directors have left Sainsbury since the start of the year.
Analysts say King is intending to streamline the business. And recent speculation that he hopes to sell 40 large stores could prove a positive move for the business, according to Paul Smiddy, analyst at Baird. He said: “Three or four years ago the marketing strategy included weird store formats that have not worked, so it would make sense to sell them.”
He added: “King will be saying the business has to be made a lot leaner and more responsive to customer demands. It is not going to be an overnight turnaround.”
Tony Shiret at Credit Suisse First Boston said: “A profit warning could be ahead.”
He said he would be surprised if it were given after the update, but added: “There is a general expectation that there will be a profit warning and it is difficult to argue with the logic of the market.”
For news of the results as they are announced make sure you log onto www.thegrocer.co.uk
Amy Balchin
Marks and Spencer and the Big Food Group will release their second-quarter trading figures on Tuesday and Wednesday respectively
And Sainsbury’s chief executive Justin King is set to report to the City on October 19. King is now under pressure to explain how he plans to turn around the retailer’s fortunes.
BFG is preparing its statement while Bauger, its biggest shareholder, is conducting due diligence over a possible takeover bid.
Food industry rumours this week suggested its bid would be reduced from 110p per share to
100p and that there were plans to sell off up to 250 Iceland stores to cash in on current high prices in the market.
Jonathan Pitkänen at Fitch Ratings does not predict positive results for either BFG or M& S.
He said: “With the Big Food Group, like-for-like sales will continue to be poor and obviously that is going to feed through to the bottom line. “
Regarding Marks and Spencer, he said: “There will be a significant drop in sales and profit in both clothing and food. Food was fantastic for them but in the last six to nine months it has run into problems.”
Sainsbury problems were further compounded by this week’s news that finance director Roger Matthews will be leaving in March, while property director Desmond Taljaard leaves next month.
In all, seven main board directors have left Sainsbury since the start of the year.
Analysts say King is intending to streamline the business. And recent speculation that he hopes to sell 40 large stores could prove a positive move for the business, according to Paul Smiddy, analyst at Baird. He said: “Three or four years ago the marketing strategy included weird store formats that have not worked, so it would make sense to sell them.”
He added: “King will be saying the business has to be made a lot leaner and more responsive to customer demands. It is not going to be an overnight turnaround.”
Tony Shiret at Credit Suisse First Boston said: “A profit warning could be ahead.”
He said he would be surprised if it were given after the update, but added: “There is a general expectation that there will be a profit warning and it is difficult to argue with the logic of the market.”
For news of the results as they are announced make sure you log onto www.thegrocer.co.uk
Amy Balchin
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