Scanning my Financial Times the other morning I couldn’t help notice that it was a full house for the quoted supermarkets, with all their share prices hitting their 12-month lows.
Tesco, Sainsbury’s and Morrison all hit the deck and were even joined by that semi-supermarket Marks & Spencer that also found itself at its low point for the year. Clearly there is little to shout about in the food retail sector if all the major players are at their yearly lows.
Apart from volcanoes, Greece’s collapse and the election, the food industry has also had to contend with Morrison’s sales growth slowing for the first time in a number of years. This took the wind out of the sector’s sales, which was not helped by the announced departure of Asda chief executive Andy Bond. He relinquished his job amicably but the backdrop was of continued falling sales at the company.
Any hopes that the always-ebulllient Justin King, chief executive of Sainsbury’s, can lift the sector from its gloom on Thursday when the group releases its results for the year to March look to be unlikely. The group is not expected to update the market with more recent trading as its like-for-like numbers are believed to be disappointing.
Which leaves Tesco as the only bright star. It recently dished up numbers that showed it has regained some of its lost momentum, which will undoubtedly have led to some of the difficulties currently being experienced by its rivals, but the lack of food price inflation in the market has affected its performance. And there are still accusations that it has bought much of its sales growth through Clubcard discounts that have affected margins.
All in all it’s a pretty depressing time for the supermarkets. And to add to its woes, the majority of the top jobs in the industry are held by newcomers who will need to get their feet under the table before making any strategic changes. Morrison’s chief exec has been in the job 10 minutes, M&S’ ceo for a mere 5 minutes, and Asda’s new ceo has not even started yet.
More games to come it would seem, and hopefully a bit more fun too.