Market commentary

Sainsbury’s growth is moving from the aisle to online. Supermarket sales rose just 1.6%, while online grew 9%, with rapid delivery up 27%. Sainsbury’s is selling more food, but with margins barely moving, it’s working harder than ever for every pound.

Shareholders are getting pretty much all of the free cash Sainsbury’s generates, through dividends and buybacks. With fewer shares in issue, earnings per share grew by more than 10%, far faster than the underlying business.

Nectar is becoming Sainsbury’s most valuable asset. The data behind it powers personalised pricing, an advertising arm on track for £100m of extra profit, and now loans and savings with NatWest. Despite handing back its banking licence, Sainsbury’s still wants a slice of shoppers’ finances.

Selling Argos ends a costly decade-long experiment and leaves Sainsbury’s a food-first business. It has gone back to being just a supermarket. Now it has to prove that’s enough.

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