Case Studies

Sainsbury's hit by poor clothing sales

Our short/sell recommendation on Sainsbury's generated more than 13% investment returns for clients after the British grocer reported poor sales across clothing & general merchandising divisions.

 

On 3rd July 2019, Sainsbury's reported a 1.6% decline in LFL sales, excluding fuel, with total retail sales down 1.2% for the 16 week period to the end of June 2019.

 

Management reported that while total grocery sales fell 0.5%, general merchandise sales dropped 3.1% and clothing sales were down 4.5%.

 

The FT Reports Sainsbury's Dire Set of Results on 3rd July 2019

 

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The results conclude a third straight quarter of declining underlying sales for the British supermarket group driven by weak demand for clothing and general merchandise, and cautioned it's core business segments remained highly competitive and promotional.

 

“Retail markets remain highly competitive and promotional and the consumer outlook continues to be uncertain,” Sainsbury’s management said.

 

Reuters data shows Sainsbury's shares down c.30% in only 5 months

 

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Woozle's team of primary researchers uncovered evidence of broad-based 1-2% LFL sales declines across larger format Sainsbury's supermarkets, declining levels of customer foot traffic and spending habits versus the same period last year, weaker results across integrated Argos-in-Sainsbury's store formats, and poor trading across general merchandising and clothing sales.

 

Woozle's Short/Sell Idea on Sainsbury's Released 19th June 2019

 

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Clients were able to scale initiate or scale their short positions with enough time to capitalise on the more than 13% drop in Sainsbury's share price in the weeks leading up to the results.

 

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