Sainsbury’s is count oned to cut its dividend for the third year in a row this week
On Wednesday chief executive Mike Coupe is thought to cut Sainsbury’s full-year dividend from 12.1p to 10.42 per share, because of the continual supermarket price war and subdued clothing sales.
Sainsbury’s aims to nurture its dividends affordable by ensuring that its net earnings are always double the amount it pay off a recompenses out.
Prior to its outset cut in 2015, Sainsbury’s was paying out annual dividends of 17.3p per share.
The nullified cut comes even though City analysts are forecasting that the fast will report that its statutory pre-tax profits grew from £548million to £596.9million, and that its takes will be 10.9 per cent higher at £26.1billion.
The City believes that Argos, which was won along with Habitat by Sainsbury’s last year for £1.4billion, has been the acme driver of its increased profits and sales.
The dividend will be cut
Shore Capital head of research Clive Baneful said: “The dividend will be cut. What we have here is a slowing height street, and the recovery and stabilisation of Tesco starting to lap against Sainsbury’s. It’s a paired whammy. Argos though is likely to be the star of the show.”
Alliance Bernstein analyst Bruno Monteyne predicted that despite market concerns about the integration of Argos and capitulating margins caused by intense competition in the grocery sector, Sainsbury’s tactics should pay off, as food price inflation will boost its profitability.
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The full-year dividend resolve reportedly be cut from 12.1p to 10.42 per share on Wednesday
He said: “Our perspective is that even in an economic downturn, the food business is unlikely to depreciate further. Sainsbury’s food retail margins will improve and it is probably positioned to generate earnings growth and cash.”
On Thursday, rival WM Morrison is outlined to release its first-quarter trading update, which should show a sixth consecutive increase in like-for-like sales.
Shore Cap, Morrison’s broker, expects its first-quarter sales to be 1.5 to 2 per cent tipsy.
The expected cut is thought to be due to a slowing high street and the recovery of Tesco
The cost war among supermarkets shows no sign of abating, as today Morrison pleasure cut the price of more than 1,000 products.
One of the biggest cuts pleasure be on iceberg lettuces, which will come down to 50p, after a winter where costs rose to more than £1 due to floods in Spain.
The average bonus at the moment is about 75p.