Shore Capital is maintaining a constructive stance on J Sainsbury (LSE:SBRY) ahead of the supermarket group's first-quarter FY27 trading update, arguing that the UK grocer has competed well against challenging multi-year comparatives even as its stock has retreated from recent highs.
The stockbroker reckons that broader market weakness, rather than any company-specific failure, is the main drag on Sainsbury's performance, with softening UK consumer confidence, cost pressures linked to the Middle East conflict, and the prospect of government-imposed price controls all weighing on sentiment.
The note singles out general merchandise as the area of greatest strain, with Shore Capital describing non-food revenue progress as "largely weak" given prevailing market conditions, an assessment that echoes Deutsche Bank's separately flagged concern about Sainsbury's exposure to a cyclical slowdown in its Argos-led general merchandise division.
The trading update covering the 16 weeks to 20 June is due on 30 June, and will be the first substantive read on whether Sainsbury's FY27 EBIT guidance midpoint of £1,025m, already sitting roughly 7% below prior consensus, proves conservative or points to further pressure.
