FTSE manages modest recovery, sales disappoint at Sainsbury’s and Carpetright aims for recovery

“After a big sell off on Monday as the US stepped up its rhetoric on trade, the FTSE recovers some ground on Tuesday. However, the index is still materially down on the highs achieved at the end of May,” says AJ Bell Investment Director Russ Mould.

Sainsbury's

“The widely followed figures on the groceries sector from Kantar make grim reading for investors in Sainsbury’s – helping to account for the slide in the share price today.

“Both sales and market share are down in the 12 weeks to 17 June, in contrast to the positive performance revealed elsewhere with UK supermarkets chalking up two years of continuous growth.

“The disappointing performance helps underpin the argument for Sainsbury’s tie-up with Asda which itself delivered a much better showing in the period.

“The heads of Asda and Sainsbury’s were forced to defend the prospective deal in front of MPs last week and getting regulatory approval for the merger is unlikely to be a straightforward process.”

Carpetright

“A £70m annual loss at carpet seller Carpetright comes as little surprise to the market with most of the attention being made to the company’s desperate attempts to stay afloat through a company voluntary agreement with its creditors and £60m fundraise.

“This process has had an impact on trading as suppliers have understandably tightened their credit terms.

“The 90%-plus take up on the share placing reflects solid market backing for a turnaround. Chief executive Wilf Walsh is adamant the situation can be salvaged, pointing to the company’s market leading position and brand strength.

“However, flooring does not seem an area where brand loyalty would necessarily be that high and if consumers, like suppliers, become concerned about whether Carpetright has a viable future then it could undermine any recovery efforts.”

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