Inflation to reveal grocery outperformers - Berenberg names its top food retail picks

Metro AG

19/04/2022 09:18

** Food price and cost inflation pressures are going to be
higher and more persistent, and the higher food price inflation
will reveal outperformers in the current environment, Berenberg
says
    ** However, the brokerage expects grocery demand to be
resilient, but sees volume pressures and/or trading down is
likely, creating margin pressures
    ** As labour cost inflation remains the largest cost
pressure, the incremental energy and fuel cost step-up is an
extra headwind to deal with, it says
    ** Berenberg favours companies that are discounter business
models with structural cost and price advantages, such as B&M
 BMEB.L  ("buy") and Jerónimo Martins  JMT.LS  ("hold")
    ** Among its favourites, it also names companies that have
scope for continued capital returns, such as B&M, Tesco  TSCO.L 
("buy"), Ahold Delhaize  AD.AS  ("hold") and Carrefour
 CARR.PA , which it upgrades to "buy" from "hold"    
    ** The broker also likes companies that have self-help
opportunities to underpin earnings, listing Carrefour, Marks &
Spencer  MKS.L  ("buy") and Sainsbury's ("hold") as such    
    ** It also retains "buy" on Ocado  OCDO.L  and "hold" on
Metro  B4B.DE  
    

 (Reporting by Marta Frackowiak)
 ((marta.frackowiak@thomsonreuters.com))