26th Aug 2015 11:36
LONDON (Alliance News) - A "tough backdrop" remains in the UK food retail sector, according to Barclays, after Kantar Worldpanel revealed that the market share of all big four UK supermarkets declined in its latest grocery market survey published on Tuesday.
Barclays said that Kantar's data gives two main causes for concern for the listed players. Firstly, the share gains of discounters Aldi and Lidl have continued to accelerate, suggesting that their slowdown in the first half of the year "might have been a 'blip' rather than a sign that the bigger players were reasserting a degree of control".
Secondly, deflation has become more marked, with grocery prices declining to 1.7% in the 12 weeks to July 19, accelerating from 1.6% in the immediately preceding period, breaking a run of modest improvements.
"A more deflationary market with stronger gains from the discounters is unlikely to generate enthusiasm for Tesco, Sainsbury or Morrison," Barclays said.
The bank added that Tesco's market share loss was higher than expected, but noted that its June trading statement showed that the market share data may not be a perfect predictor of its underlying performance. Tesco's market share fell to 28.3% in the 12 weeks from 28.8% a year before.
Morrisons' share loss was the highest since February, falling to 10.8% from 11.0% a year before, but Barclays noted that the company did face especially tough comparatives.
Sainsbury's, whose market share slipped to 16.3% from 16.4%, was the relative winner, Barclays said, but added that its performance actually looks "unremarkable" given pretty weak comparatives.
"All in all, a reminder that there is some distance to go before the market becomes appealing," Barclays said.
Shares in Morrisons were trading down 0.2% at 166.60p Wednesday afternoon, while Sainsbury's shares were trading down 0.4% at 236.80p and Tesco shares were up 0.9% at 187.65p.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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