Glory days are over at Sainsbury's
Sunday 04 February 1996
Whether this can last is hard to say. But Sainsbury's had built its fortunes on its appeal to quality, and benefited from the higher margins of this strategy. The trouble with this, critics say, is that the group has taken its eye off the main ball - its customers. Good margins, now under pressure, have been at the expense of good customer relations. Sainsbury's management is also under fire for losing ground to its rivals. Tesco, Asda and Argyll have made startling advances in the past few years. In many of its stores, Tesco offers shoppers a more pleasant environment.
Can Sainsbury's fight back? Perhaps, but the problems may need more than just tinkering with; it could require wholesale change to how the group does business, which will take years, not months. So the limits to growth seem to have been reached, and the glory days are over. If you have been a long-term holder, at 391p, now is probably a good time to lock in some profits and wave goodbye to the shares.
GAMES Workshop is the sort of company whose shareholder following could match the devotion of its customers. The latter are addicted, some would say, to Games Workshop's range. Its main product is lead model warriors for complex board games. Fans take days, weeks even, playing out intergalactic battles and planetary conquests. There is also a substantial income from supporting products, like newsletters. Although the group has excellent growth prospects within its current markets, there is a strict limit to how far this can go. After all, not everyone will want to settle down of a weekend with Warhammer. But for now the figures look exciting. Interims last week for the six months to November showed a 31 per cent boost in sales, to pounds 19.5m, with pre-tax profit of pounds 3.16m, up from pounds 2.46m. The shares, at 308p, trade on a price-earnings ratio of 23 - pricey, but worth a punt.
FUND management group Perpetual has been in the spotlight, with the shares romping ahead to 2,185p by Friday, up from 2,040p at the start of the week. But majority owner Martyn Arbib, who between his family and charitable trusts controls 65 per cent of the shares, has said he is not a seller. Of course, everybody has a price, as Arbib, a shrewd operator, would admit.
Perpetual is well up there as one of the most successful fund management groups in the UK, and with outstanding performance by many of its funds, it has earned the admiration of the City and private investors. But a buyer will only want to strike a deal if it can guarantee the existing management stays with the new owner. If a bidder were to emerge, the recent gains have eliminated much in the way of a premium they would be willing to pay. Sell.
THE outbreak of hostilities in Toyland, with the mega-bid battle unleashed by Mattel for Hasbro, has fizzled out. But whatever excitement was generated by the American drama largely passed by shares in toy minnow Cassidy Brothers. Little surprise here, since over the past seven years from the time of its flotation, it has managed to return an average 4 per cent capital appreciation a year. Recent results were nothing to shout about, with pre-tax profits for the six months to November down a touch to pounds 0.50m from pounds 0.52m. Now traded on the Alternative Investment Market, the share, at 68p, is one to avoid.
THERE are numerous uncertainties surrounding the recent news from Airtours that it was in possible negotiations to sell a 30 per cent stake in the company to fellow tour operator Carnival Corporation of the US. A 30 per cent rise in the share price, to 434p, is a signal to bale out. The $6.5bn US company has yet to reveal its plans, but there are some worrying aspects which may not bode well for shareholders in the future. Given that Airtours management already owns 30 per cent of the shares, another 30 per cent held by a friendly shareholder would weaken the position of the ordinary shareholders. Sell.
- 1 Mother fed her daughter tapeworms to make her skinny for beauty pageant
- 3 Crystal Palace next manager latest: Palace consider Ally McCoist - EXCLUSIVE
- 4 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 5 Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'
'Alien thigh bone' on Mars: Excitement from alien hunters at 'evidence' of extraterrestrial life
West poised to join forces with Assad in face of Islamic State
Pamela Anderson rejects ice bucket challenge because of ALS experiments on animals: 'Mice had holes drilled into their skulls'
James Foley 'beheaded': Isis video shows militant with British accent 'execute US journalist' – as hunt begins for killer
ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Disgusting, frustrating, but intriguing: how the country really feels about its politicians
Bin bag full of cats' heads discovered near Manchester's Curry Mile
iJobs Money & Business
£20000 - £27000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...
£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst - (Active Di...
£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...
£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...