Sainsbury’s reported an impressive set of FY results on 28 April and we were delighted to welcome James Collins, Director of Investor Relations and Financial Planning, to a Yellowstone and ShareSoc webinar to go through them and the outlook for Sainsbury’s in the current year.
Grocery is the largest part of the business and makes up c70% of sales with 15% from online and General Merchandising comprises c20% of sales with c80% of these starting online. Grocery sales were flat yr/y and up 7% on 2 years ago suggesting that post pandemic sales were being maintained. Underlying PBT was up 104% yr/yr to £730m and up 25% on 2 years ago due to lower covid related costs.
Cash generation has been good with at least £500m of free cash flow generated over the last 3 years and this has meant that net debt (excluding capitalised leases) has almost been completely eliminated. One of the consequences of this is that the payout ratio to shareholders is being increased from 50% to 60% and it is likely the company will consider other forms of cash returns to shareholders in addition to this in the next couple of years.
The business is one year into a three year plan that is delivering for shareholders. There has been good progress on cost savings and offering improved value proposition relative to competitors. The macro presents challenges on the cost inflation front and there are cost of living pressures on disposable income but the company is well place to deal with these and in a much stronger position than they were in two years ago.
You can watch a recording of the webinar here.
