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Citi upgrades Sainsbury, downgrades B&M
(Sharecast News) - Citi has readjusted a host of ratings and target prices across the European retail and brands sectors amid a "lacklustre" macro outlook, highlighting UK-listed Tesco among its key 'buys'. The bank raised its recommendation on fellow supermarket chain Sainsbury from 'neutral' to 'buy' (target price raised to 349p from 333p), but downgraded discounter B&M European Value Retail from 'buy' to 'neutral' (target cut from 215p to 165p). Tesco's target price was lifted to 510p from 460p.
Citi said it sees just a 1.1% increase in the amount of cash available to consumers for discretionary expenditure in 2026, with grocery inflation set to fall to 3% from 4.2% over 2025 to date.
"We see potential headwinds for discretionary retail at the 'value' end given the growing popularity of C2C fashion; albeit the EU bringing forward legislation to close the 'de-minimis' loophole in 2026 should be welcome news for the sector," the bank said.
Meanwhile, the impact of the UK's business rates reform was "not as bad as feared" for the sector, while the full effect of trade tariffs should impact supply chains in 2026.
"With the backdrop of a lacklustre macro, we prefer operators that we believe can leverage their business models and / or gain share e.g. via store optimisation and retail media."
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