Aldi and Lidl Now Command a Combined 9.0% Share of the UK Market according to Kantar this past week.
Sainsbury’s (LSE: SBRY) a rather disappointing member of The Value Investor Report since April 2014 who reported sales growth for the first time since last August in the 12 weeks to 29 March, is being squeezed by food price deflation and an intensifying price war launched to counter discounters Aldi and Lidl.
Market share for Sainsbury’s fell to 16.4% from 16.5%.
Big named rival Tesco (LSE: TSCO) followed suit and grew sales in the same period and also lost market share down to 28.4% from 28.6%.
Aldi and Lidl’s joint share rose to 9% from 8%.
…the 72.8% share taken by the biggest four retailers is now at the lowest level in a decade
Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.
Although the rate of market share loss is slowing for Sainsburys it has yet to stop the rot even though it has already cut costs, dividends and new store openings to fund an extra £150 million in lower prices.
The recovery is not there yet and I can see myself holding onto Sainsbury’s shares for at least the next 12-18 months as I do not envisage a turnaround anytime soon, a view echoed by CEO Mike Coupe:
We expect the market to remain challenging for the foreseeable future. Food deflation is likely to persist for the rest of this calendar year, and competitive pressures on price will continue
What annoys me though about this whole sorry saga is the fact that I correctly predicted the Tesco share price decline down to 160p on 4 June 2014 and subsequently did not pull the trigger.
Thankfully the reasons for this lack of courage have been eradicated and the only problems I have to deal with are maintaining patience both in terms of actually finding quality investments (an increasingly difficult task) and not just opening positions for the sake of it as well as holding stocks through temporary and unfounded meltdowns which is tricky given the already inflated levels of stock market valuations.
I still have plenty of cash so I’m well placed to take advantage both of undervaluations and any bear market correction to the short side when it eventually makes its appearance.
Applying this thinking to my position in Sainsbury’s means that I’ll hold for the time being but not add to the position until a significant change in Sainsbury’s fortunes materialises.