Sainsbury’s boss Coupe needs to show improvement with results due

Can Mike Coupe serve up a surprise on Wednesday when the Sainsbury’s CEO is due to unveil the grocer’s first quarter results?

The City doesn’t seem to think there’s much chance of the rain cloud that’s hung over its London HQ since the collapse of its attempt to merge Asda going anywhere.

The shares have been dining on Pedigree Chum rather than Taste the Difference in recent months, with these dogs of the grocery sector currently languishing at close to 30-year lows.

Sainsbury’s hates the regular performance data for the grocery market and its participants put out by researcher Kantar because it excludes general merchandise – what Argos sells in other words – and draws its conclusions based on an analysis of the shopping baskets of a panel of 30,000 or so people.

In fact, struggling supermarkets nearly always grouse about this when they’re on the ropes. Last weeks showed Sainsbury’s up as the worst performer among the traditional big four. They’re all struggling in the face of Aldi and Lidl, but none more so than Coupe’s outfit, and it’s been that way for some time.

Still, Kantar’s head of retail, Fraser McKevitt, did manage to find a few crumbs of comfort for the chain, noting that the rate of decline in sales has fallen, in part because of an increase in the number of affluent consumers visiting its stores.

With more money to spend on higher margin premium products, this represents something we haven’t seen from this company in some time: an encouraging sign. It also bodes well for the success of the grocer’s plans to put some vim into its fresh food offer.

If Kantar had it right, and this has fed through to the bottom line, I wouldn’t be at all surprised to see Coupe choosing to make note of it.

Sainsbury’s doesn’t traditionally say much about earnings at this stage. It publishes only sales data. But there’s nothing like encouraging news on margins to make the medicine of disappointing news on that front go down a tad more easily with the City’s investors.

Coupe certainly needs to find something. You may remember how, upon the announcement of his plans to merge with Asda, he was embarrassingly caught singing “we’re in the money” prior to a TV interview. That’s exactly what Sainsbury’s investors haven’t been of late.

Coupe was able to keep them sweet(ish) with a chunky dividend hike at the full year mark last time around, while pointing to decent “underlying profits”.

These were up for the second year in a row. Trouble is, as I said at the time, the figure he gave stripped out a raft of “one off” hits that seem to afflict Sainsbury’s every year. Headline pre-tax profits were down for a third straight 12-month period.

If Coupe were a football manager, the group’s fall into the sector’s relegation zone would have fans baying for blood. Institutional investors are a little more tolerant.

But the Sainsbury’s boss really needs to prove McKevitt was on the right track. Their patience isn’t limitless.