Sat. Jan 22nd, 2022


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Sainsbury’s raised its profit forecast for the year to March thanks to “strong” Christmas grocery sales, cost savings and a better outlook for the group’s bank.

A continuation of the trend for consumers to eat in increased grocery sales, the supermarket said, which helps offset cost pressures. Argos benefited from stronger margins following a cost-cutting program, and the financial services division also performed better than expected, with bad debt below the expected levels and lending volumes starting to bounce back.

Sainsbury’s said it expects to report underlying full-year pre-tax profits of at least £ 720 million, compared to the £ 660 million it had forecast in July.

Grocery sales in the third quarter fell slightly compared to last year, down 1.1 percent, but were 6.6 percent higher than two years ago. In the general merchandise division that includes Argos, sales slowdown was more pronounced, 16 percent lower than last year or 11 percent at two years ago. Sainsbury’s said it reflects “both weak demand and limited supply” and its “strategy to focus on profitable sales”.

Retail Correspondent Jonathan Eley has more.

What do Sainsbury’s results tell us about life after restraint? Tell me what you think citybulletin@ft.com

Briefly

JD Sports upgraded its profit guidance for the year after “another extremely robust performance”. The trainer retailer said pre-tax profits for the year to end-January would be at least £ 875 million rather than the £ 810 million analysts had expected. JD said it had the US fiscal stimulus to resign for up to £ 100 million of it, after government support encouraged consumers to spend in the first half of last year. It estimated that profits would be flat next year – again better than analysts had expected.

Premier Inn Owner Whitbread said trade in the UK was “resilient” over the Christmas period despite disruption of Omicron’s plans, although the rate of sales growth slowed to 5.1 per cent from two years ago from 10.6 per cent in the three months to November. It warned that it was preparing for inflation in the sector to reach 7-8 per cent in the year ahead, but said it might be able to “largely compensate” this headwind and return to pre-Covid -marges.

Real Estate Group Savills reported an “extremely strong” end of 2021 with its full annual performance “very significantly above expectations”. The leading UK residential market flourished, but so did international markets. Savills warned, however, that the outstanding trade would not last: it benefited from the diversion of travel and entertainment spending to property during the pandemic and had a shortage of stock for sale in the UK in the coming year.

Werwer Page group reports similar positive trading to rival Robert Walters, who updated the market yesterday. Gross profit increased by almost 50 percent in the last quarter of the year compared to last year or 24 percent compared to two years ago. For the full year, gross profit was 44 percent above last year. The boom was driven by increases in permanent staff rather than temporary workers.

Even today, furniture retailer updates DFS, house builder Vistry, real estate agent Winkworth a food ordering platform Only eat takeaways.

Beyond the square mile

Major US companies tends to have a strong earnings season despite high inflation, wage pressures, supply chain disruption and Omicron, George Steer reported. Companies in the S&P 500 will deliver annual earnings growth of nearly 22 percent for the last quarter of 2021 after a nearly 40 percent increase in the third quarter of the year. Nine of the 11 sectors represented in the index are expected to report earnings growth, with only utilities and finance expected to shrink.

Abu Dhabi Wealth Fund is bucking the global trend by betting on Turkey. ADQ, a government investment vehicle, says a weak lira makes it a “great time” to invest in Turkey if you take a “long-term view”. Andrew England and Simeon Kerr have it Abu Dhabi report.

And Chinese technology stocks jumped again overnight, William Langley reported of Hong Kong, and continues with a rollercoaster start of the year. Ecommerce groups JD.com and Meituan led the rises and lifted the Hang Seng Tech index to as much as 3.8 percent and the broader benchmark by 2.1 percent. Weaker-than-expected December inflation data in China gave equities additional momentum.

Lex looks at electric truck maker Rivian, which produced 1,015 vehicles last year. By 2030, it aims to make 1 million a year, or as Lex puts it: “1,000 electric vehicles manufactured, 999,000 to go”. Nevertheless, Lex claims that the company, which trades above its IPO price but trades around half of its November high, is on the right path.

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