Performance Overview Of LSE listed Sainsbury (J) Plc and NASDAQ listed EBay Inc

Sainsbury (J) Plc

Sainsbury (J) Plc (SBRY) is a United Kingdom based supermarket chain. The company is amongst the top three supermarket chain stores in the United Kingdom. In 2019 the company completed its 150 years in existence having been founded in 1869. The company has six business divisions; Sainsbury’s Groceries, Argos, Tu, Sainsbury’s Home, Sainsbury’s Bank and Habitat.

Sainsbury’s Groceries is the company’s oldest business vertical with 608 supermarket outlets, 820 convenience stores and more 12000 own branded products. Argos is the company’s online retailing portal it gets more than 1 billion visits per year and is United Kingdom’s third most visited web portal. TU is the company’s clothing range with products available across 400 stores with over 3000 items of individual products, Sainsbury’s Home is the cutlery, home furnishing and other home improvement product retailing arm of the company having 6000 individual items of products and available across 400 stores. Sainsbury’s Bank provides financial products like credit cards, savings banking services, loans and insurance services among other services to its customers. Opened in 1997 the bank provides attractive reward points to its shoppers. Habitat is the home internal decoration business vertical of the company. This vertical has nearly 4500 products in its collection available across 16 stores in the United Kingdom.

The biggest shareholder in the company is the Sovereign wealth fund of Qatar having a holding of 21.99 per cent of its equity. The stock of the company trades on the London Stock Exchange with the ticker name SBRY. It is a constituent of the FTSE 100 index.

Financial Update

The company on 1 May 2019 came out with annual results for financial year 2019 ended on 9 March 2019.

  • The Underlying profit before tax for the financial year of the company stood to £635 million, which is a growth of 7.8 per cent year over year, helped by excellent performance in food division, delivery of £160 million worth of synergy benefit from Argos three quarters of the year before schedule and lower interest costs.
  • The company’s retail arm’s underlying operating profit went up by 10.7 per cent to £692 million. Sainsbury’s Bank’s underlying profit was at £31 million, which is in accordance with the guidance of the company.
  • The Statutory profit after tax of the company was at £219 million for the year and it declined from statutory profit after tax of £309 million for the last financial year. This was on account of non-underlying spend on account of legislation on Sainsbury’s Bank transition, the Guaranteed Minimum Pensions, restructuring of the company’s retail arm, the Asda transaction and integration of Argos.
  • The Net debt of the company fell during the period by £222 million to be placed at £1,636 million (including perpetual securities). The Net debt reduction of £162 million is before the fair value adjustments to derivatives and exceeds the £100 million guidance, previously issued.
  • The company, during this period, delivered a strong cash generation with retail arm generating a free cash flow of £461 million, which is a growth of 6.7 per cent for the year. £220 million worth of cost savings were also delivered by the company during the year.
  • The underlying net finance costs of the company for the year also climbed down steeply by 19.3 per cent to £96 million.
  • The board of the company proposed a final dividend of 7.9 pence per share, which will take the full year dividend to 11.0 pence per share, an increase of 7.8 per cent over previous year.

Source – Company’s Annual results published on 1 May 2019

Stock performance at the London Stock Exchange

Price Chart as on 26 September 2019, before the market close (Source: Thomson Reuters)

On 26 September 2019, at the time of writing the report (before the market close, GMT 04.06 PM), SBRY shares were trading on the London Stock Exchange at GBX 220.70.

The stock has a 52-week High of GBX 327.25 and a 52-week low of GBX 177.05. The total market capitalization of the company was £4.86 billion.

Outlook

The company during this year successfully integrated Argos with itself, which was acquired in 2016, which helped it achieve £160 million worth of synergy benefits ahead of schedule. The company also achieved a major transformation in the way it run Sainsbury’s stores, achieving significant improvements in the process to store standards, which will continue to remain a focus. Clients continue to rate the company on top for quality food and it is also expanding its premium range of products. The company continues to focus on reducing costs and invest in order to make commodity products deliver better value to customers.

The company plans to increase investment in its core business, by upgrading 400 supermarkets this year. £4.7 billion worth of company’s revenue is online, hence an upgradation in technology infrastructure is warranted. The company also plans to reduce its net debt by £600 million over the next three years.

The company is confident that it will be able to deliver on its strategy despite the challenges of operating in a highly competitive market where shopping habits continue to change.

eBay Inc

eBay Inc (EBAY) is a multinational e-commerce giant based out of San Jose in California. The company formed during the dot-com era is one of the few successful ones which could made it big. The company which started out as a facilitator of customer-to-customer and business-to-customer transactions is today a multi-billion dollar global behemoth.

The company over the years acquired many smaller companies like PayPal, Craigslist, Skype, StubHub, Corrigon and Qoo10.jp that contributed significantly to its growth into enormous proportions.

The company primarily offers online auction style method of selling products on its website. The buyers are not charged anything for their transactions; however, the sellers are charged beyond the first few free transactions.

The company’s shares are listed on NASDAQ where they trade with the ticker name EBAY.

Financial Update

The company on 18 July 2019 came out with its 10Q statement with the interim results for the quarter and six-month period ended 30 June 2019.

  • The revenues of the company for the six-month period ended 30 June 2019 was US$5.33 billion compared to revenue of US$5.22 billion for the corresponding six-month period ending 30 June 2018.
  • The total net income of the company for the six-month period ended 30 June 2019 was US$920 million compared to total net income of US$1.049 billion for the corresponding six-month period ending 30 June 2018.
  • The net income per share on diluted basis of the company for the six-month period ended 30 June 2019 was US$1.05 compared to net income per share on diluted basis of US$1.04 for the corresponding six-month period ending 30 June 2018.

Source – Company 10Q statement published on 18 July 2019

Stock performance on the NASDAQ

Price Chart as on 26 September 2019, before the market close (Source: Thomson Reuters)

On 26 September 2019, at the time of writing the report (before the market close, ET 03.59 PM), EBAY shares were trading on the NASDAQ at US$38.9250.

The stock has a 52-week High of US$ 42.00 and a 52-week low of US$ 26.01. The total market capitalization of the company was US$ 32.65 billion.

Outlook

The company has had a poor financial performance this year, however the company paid a total of US$120 million in cash dividends during the three months ended June 30, 2019 and US$245 million in cash dividends during the six months ended June 30, 2019. In July 2019, the Board of Directors of the company declared further cash dividend of US$0.14 per share of common stock to be paid on September 20, 2019 to shareholders on record books of the company as on September 3, 2019.