Sainsbury's growth slows

Sainsbury's is on course to declare robust growth in first-half pre-tax profits this week (11 November). These are expected to be strong, with underlying profits forecast to have risen 16% to £300m.

Yet despite the good news, the City has worries that Sainsbury's will now slow down as competition and falling food price inflation take their toll on future growth. Some City analysts calculate that Sainsbury's underlying sales growth has slowed to 2.8% from 5.7% in the first half, as the supermarket sector passes on lower commodity prices to its customers.

Matthew Truman, analyst at City bank Nomura, feared that Sainsbury's in-store offers would intensify the pressure on profit margins. He said more than a third of its products were on promotion and advised investors to sell their Sainsbury's shares. But they may regret doing so if, as rumoured, majority shareholder Qatar Investment Authority launches an all-out bid for Sainsbury's.


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