London’s supermarket chain J Sainsbury PLC (GB:SBRY) is planning a phased wind-down of its banking operations, CEO Robert Simons announced today. The move is a part of the retailer’s Food First strategy, initiated in 2020, under which it aims to focus on the core retail businesses. The announcement comes as Sainsbury completed a review of its financial services division ahead of the company’s Strategy Update on February 7.
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Sainsbury’s also announced that Jim Brown, the current CEO of Sainsbury’s Bank, will retire and be replaced by Robert Mulhall effective the end of March.
FTSE 100-listed Sainsbury’s is the second-largest supermarket chain in the U.K., offering groceries, merchandise, clothing, and electronics. It operates through three main units: Sainsbury’s Supermarkets Ltd, Sainsbury’s Bank, and Argos. SBRY shares have gained over 23% in the past year.
Sainsbury’s Planned Banking Exit
Simons said that Sainsbury’s will begin providing its banking services through third-party financial companies as it does with its insurance products. The company will gradually exit the Sainsbury’s Bank business by switching its operations to a distributed model.
The supermarket chain said that it will offer “white label” financial services in the future. This involves selling other bank’s products under the Sainsbury’s brand name to ensure that the company does not have any liabilities on its books.
Since the strategic shift toward its food business in 2020, Sainsbury’s has been exploring several options. It even had bidders for its banking operations back then but dropped the idea in 2022 after the bids did not prove shareholder-friendly. The company even sold off its mortgage portfolio of 3,500 customers to the U.K.-based Co-operative Bank in August 2023.
Talking about the changes in the banking operations, Sainsbury’s said that customers will not see any visible changes immediately to the products and services as the withdrawal will occur in a phased manner.
What is J Sainsbury’s Price Target?
Today, Bernstein analyst William Woods lifted the price target on SBRY stock to 320.00p from 300.00p while maintaining a Hold rating.
On TipRanks, SBRY stock has a Moderate Buy consensus rating based on three Buys, two Holds, and one Sell rating. The J Sainsbury plc share price target of 311.00p implies 8.6% upside potential from current levels.
