SBRY

The struggling supermarket chain faces more problems

by John Marshall

Sainsbury (SBRY) is due to issue its second-quarter trading update on 8 October. This is unlikely to please the market and investors should sell now.

In recent days several brokers such as Freddie George of Seymour Pierce and Alastair Johnson of JP Morgan have downgraded Sainsbury, whose market share is falling as consumers trade down to cheaper stores such as Asda, Morrison (MRW) and Aldi.

Initially Sainsbury was immune to this because of its strength in the south. Last week , however, Morrison emphasised it was enjoying double-digit growth in London. Sainsbury will clearly be the major victim and will need to rethink its strategy.

Although some optimists hope the Qataris will return with another bid it seems unlikely.

Shares says: The shares are currently selling at a premium to others in the sector, which is unjustified. Sell