Analysts at HSBC wiped the smile off Sainsbury’s chief executive Mike Coupe’s face by slashing their profit forecasts for the supermarket group and predicting profits will continue to fall for the next three years.
Data earlier in the week showed Sainsbury’s, 5p worse off at 223.7p, as the only one of the Big Four grocers to register a rise in sales in the last quarter, but HSBC analyst David McCarthy ensured that the celebrations were short-lived.
He says business in the latest quarter is likely to show an improvement, but added: “This does not detract from the bigger strategic issues.”
The analyst slashed his profit forecasts for the supermarket group by 6 per cent this year, by 9 per cent for next year and by a hefty 16 per cent for the year after.
Rival Tesco also fell 3.4p to 165.15p, its lowest close since December, while Morrisons lost 2.7p at 149.9p.
More concerns over the state of the global economy, exacerbated by plans for huge job losses at US construction and mining equipment maker Caterpillar, shook the increasingly volatile FTSE 100, which dropped 70.75 points to end at 5,961.49.
Things were much worse in Germany though. The DAX tanked again and has now racked up losses of 8 per cent this week thanks largely to the VW emissions scandal, which has now engulfed rival car maker BMW.
Closer to home, fears over the future of diesel cars has hit car parts manufacturer GKN, which tumbled another 5p to 255.8p. Around 15 per cent of revenues from GKN’s Driveline division are thought to come from Volkswagen.
Glencore crashed 10.49p to 98.61p, finishing below 100p for the first time since its 2011 float at 530p.
Ivan Glasenberg’s commodities giant has now watched two-thirds of its stock market value vanish this year.
More general uncertainty about the world’s economies boosted gold’s safe-haven appeal and helped producer Randgold Resources to the top of the blue-chip leaderboard, up 206p at 3,946p.Reuse content