Sainsbury’s to deliver robust showing after online boost
Supermarket’s sales have risen during the crisis; fellow retailer Primark is also seeing demand return
Draper Esprit, Wood Group (John) Economics
Mortgage approvals and lending, consumer credit (UK), business and consumer confidence (eurozone), inflation (Germany), pending home sales (US)
Insulation specialist SIG has not been the strongest performer of recent years.
Updating the market earlier in June, the group reported a gradual improvement in its trading performance over the prior two months – though the pick-up may have been catch-up sales rather than rising demand. Citi’s Ami Galla praised the group’s new management for resolving to develop “a service oriented focus with investment in people” – but warned further action would be needed.
“While we believe this is a sensible approach – the current market conditions is likely to make it more difficult to turnaround the UK business,” she wrote. Tuesday’s full-year results may give a sense of what the road ahead involves.
On The Beach
Q1 GDP final reading (UK and Spain), business investment, BoE chief economist Andy Haldane hosts webinar (UK), industrial production (Japan), inflation (eurozone), consumer confidence (US)
Supermarket Sainsbury’s will serve up results for the first quarter on Wednesday – and UBS’s Sreedhar Mahamkali is expecting a “robust” performance.
Industry data would appear to carry out that thesis: Sainsbury’s sales have risen during the Covid-19 crisis, and it has enjoyed a major boost in online sales, driven by lockdown demand.
“Continued strong demand for food at home and healthy operating leverage” should lift the group’s performance across the full year, Mr
Mahamkali wrote, but said it “too early” to revise estimates.
Sainsbury’s, Topps Tiles Economics
Manufacturing PMI final reading (UK, eurozone, France, Germany, Italy, Spain), Caixin manufacturing (China), ADP employment change, ISM manufacturing (US)
Primark – the cornerstone of Associated British Foods’ slightly eclectic operations – kicked back in action earlier this month after a period of total shutdown. Jefferies’ James Grzinic anticipates “a faster emergence from hibernation than initially expected”, with consumers flocking towards value propositions as they refresh their wardrobes. “A stream of newsflow has provided plenty of evidence that shoppers, facing a depressed economic environment but eager to escape the confines of the last three months, are prioritising price,” he wrote.
Also offering a trading statement is Meggitt. Though the engineering group has seen its share price heavily hit by turmoil in the aviation sector, Jefferies’ Sandy Morris sees it emerging from the crisis stronger, and with opportunities to seize ground from its rivals.
Associated British Foods, Meggitt Economics
PPI inflation (eurozone), unemployment (eurozone, US), non-farm payrolls, trade balance, jobless claims (US)
Fuller Smith & Turner
Consumer confidence (UK), services PMI final reading (UK, eurozone, Germany, France, Italy, Spain), Caixin services PMI (China), US public holiday (Independence Day).
Economic week ahead
If the Covid-19 recession has a silver lining, it may be that households are improving their finances at a record pace, piling up savings that can later be spent to support the recovery.
We will see more evidence today from Bank of England lending numbers for May.
Analysts expect a repeat of April’s data, with households paying down a net £3bn.
Mortgage balances may fall by a similar level as moving house was tough in the lockdown, so few new loans were made by lenders.
Tomorrow the Office for National Statistics (ONS) gives further detail on the economy in the first quarter of 2020 as the virus began to hit. Purchasing managers’ index surveys from Wednesday to Friday will show the recovery beginning to emerge in June.
Meanwhile a series of Bank of England speeches include Andrew Bailey, the Governor, talking today about the financial risks of climate change, Andy Haldane, chief economist, tomorrow on the economy in the second quarter, and Jon Cunliffe, the deputy governor, on central banks’ roles in the pandemic.
Analysts forecast a strong performance from Sainsbury’s with sales up during lockdown