Analysts predict unhappy Christmas for Morrisons and Sainsbury's

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Sainsbury’s and Morrisons were among the biggest fallers on the FTSE yesterday amid analyst concerns of lacklustre trading over the crucial Christmas period.

Ahead of a trading update from Morrisons on Monday (7 January) and Sainsbury’s third-quarter results on Wednesday (9 January), analysts predicted Morrisons would report a 2.8% drop in like-for-like sales, while Sainsbury’s would report growth of 0.9%.

“We expect Morrisons to kick off the January trading season in a weak manner,” Jeffries analyst James Grzinic said in a note.

“We expect hard discounters to have experienced a disproportionate improvement in market share over Christmas, particularly in the north of England. Secondly, more affluent consumers’ migration to online shopping seems to have accelerated over the festive season,” Grzinic added.

In a separate note, Oriel analyst Jonathan Pritchard said: “It appears the established podium lineup (Waitrose, Aldi and Lidl) stretched their lead, but the biggest slowdown may have come at Sainsbury’s.”

Sainsbury’s shares dropped by 14.5p to close on 333.40p yesterday. Morrisons’ shares dropped 4.3p to end on 257.40p.

Last year, Sainsbury’s reported a 2.1% increase in like-for-like sales, excluding fuel, for the 14 weeks to 7 January 2012. Morrisons reported like-for-like growth of 0.7% for the six weeks to 1 January 2012.

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