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Sainsbury’s (SBRY) +2.35% – may benefit from discount rivals’ slower expansion
Sainsbury’s (SBRY) closed 2.35% up in London on Monday after Credit Suisse said that the UK supermarket chain could benefit from less aggressive expansion from discount rivals Lidl and Aldi.
As Sainsbury’s announced that it will add 60 more products to its price drop list, analysts at Credit Suisse revealed that both Sainsbury’s and Tesco (TSCO) could gain from their German-based competitors slowing their rollout of new stores.
A recent report found that Aldi and Lidl are lagging in their efforts to expand in the UK despite ambitious plans for the future.
Aldi has said that it wants to open 280 stores by 2025, while Lidl is hopeful of adding 140 more within two years.
However, Credit Suisse said that the discount chains could struggle to find suitable locations for their new stores within that time frame.
The investment bank said that this may be favourable to other supermarkets, most notably Sainsbury’s and Tesco, as they are the most exposed by discount-based arrivals.
Sainsbury’s has been lowering the price of popular goods to stave off competition from cheaper alternatives.
In February, it announced that 250 items would be reduced in price and it said on Monday that 60 more products will be added to the list in July.
This follows positive feedback from customers about the new price-cutting drive.
The UK’s second largest supermarket is performing well at the moment as it recently revealed that sales, driven by a pandemic boom, climbed 7.8% in 2020.
Sainsbury’s shared advanced on the London Stock Exchange at the start of the new week, rising 2.28% to 278.20p by the session’s close.
Tesco also made gains after finishing 3.07% higher at 231.50p.
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