REG - Sainsbury(J) PLC - Q3 Trading Statement

J SainsburyAnnouncement

07/01/2021 07:01

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RNS Number : 8460K  Sainsbury(J) PLC  07 January 2021

7 January 2021

J Sainsbury plc

Third Quarter Trading Statement for the 15 weeks to 2 January 2021

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

Strong Q3 and Christmas performance

·     Christmas like-for-like sales up 9.3 per cent(1)

·     Q3 like-for-like sales up 8.6 per cent (excl. fuel), with total
retail sales up 6.8 per cent (excl. fuel)

·     Grocery sales grew 7.4 per cent, with Groceries Online up 128 per
cent

·     General Merchandise sales grew by 6.0 per cent, with Argos sales up
8.4 per cent

·     Clothing sales grew by 0.4 per cent

·     Total digital sales grew by 81 per cent, 44 per cent of total sales

·    We now expect, after forgoing business rates relief of £410 million,
to report underlying profit before tax  (UPBT) of at least £330 million in
the financial year to March 2021 (financial year to March 2020: £586 million)

 

Simon Roberts, Chief Executive of J Sainsbury plc, said: "As we enter our
third phase of tighter restrictions and national lockdowns, my number one
priority remains keeping our colleagues and customers safe. The last few
months have been really tough for many people and we are all dealing with a
lot of change and uncertainty again. Given these challenging circumstances, we
really focused on doing the best possible job for our customers this
Christmas. I would like to say a huge thank you to every one of my colleagues,
including the 68,000 colleagues we have recruited into Sainsbury's and Argos
since March, for the outstanding service you gave our customers.

"We made a strong start to delivering our Food First plan and we are also
clear on the opportunities to further improve our offer as we look ahead for
2021. At Christmas we focused on offering our customers great prices, great
quality and great service and I feel really proud that Sainsbury's customer
satisfaction scores were the highest ever in the key Christmas week. We have
started the new year with a strong value offer, with Price Lock currently on
over 2,500 everyday products.

"Many customers had to change their Christmas plans at the last minute and we
sold smaller turkeys and more lamb and beef than normal. While people had
smaller gatherings, they still treated themselves, with Taste the Difference
sales up 11 per cent. Premium champagne sales were up 52 per cent, Taste the
Difference party food was popular throughout December and people did more home
baking than usual with mincemeat sales up 24 per cent. Customers still wanted
New Year's Eve at home to feel special and we sold a record number of steaks.

"More customers bought their food online than ever before and we delivered 1.1
million orders in the ten days to Christmas, double the number of last year.
Argos sales were up over eight per cent with Fast Track home delivery and
Click & Collect beating expectations for Black Friday and Christmas.

"We are delighted that our 'Help Brighten a Million Christmases' campaign
raised £6 million in just two weeks for over 800 local charitable partners as
well as Comic Relief and FareShare. We are also creating another £1 million
local community fund for all our stores to donate to charities and other good
causes in their local area and we are continuing to support the government's
free school meal vouchers scheme.

 "We remain focused on delivering the plan we outlined in November and look
forward to providing a further update on early progress at our Preliminary
Results in April."

 

Outlook

 

Grocery, General Merchandise and Clothing sales were stronger than our
expectations throughout the quarter and particularly since the start of
England's second national lockdown and subsequent increased restrictions
throughout the UK. General Merchandise and Clothing gross margins additionally
benefited from better than anticipated full price sales, driven by customers
shopping earlier for Christmas and successful changes to our Black Friday
trading strategy.

The impact of the pandemic on sales, colleagues and costs adds additional
uncertainty to our financial outlook for the remainder of the year. However,
after forgoing business rates relief of £410 million(2) we now expect to
report underlying profit before tax (UPBT) of at least £330 million in the
financial year to March 2021 (financial year to March 2020: £586 million).

 

 Like-for-like sales growth                    2019/20                         2020/21
                                               Q1      Q2      Q3      Q4      Q1       Q2       Q3
 Like-for-like sales (exc. fuel)               (1.6)%  (0.2)%  (0.7)%  1.3%    8.2%     5.1%     8.6%
 Like-for-like sales (inc. fuel)               (1.0)%  (0.4)%  (1.1)%  1.3%    (2.3)%   (0.5)%   3.2%

                                               2019/20                         2020/21
 Total sales growth                            Q1      Q2      Q3      Q4      Q1       Q2       Q3
 Grocery                                       (0.5)%  0.6%    0.4%    2.0%    10.5%    5.1%     7.4%
 Total General Merchandise                     (3.1)%  (2.0)%  (3.9)%  (1.3)%  7.2%     7.6%     6.0%
         GM (Argos)                                                    0.4%    10.7%    10.9%    8.4%
         GM (Sainsbury's Supermarkets)                                 (8.1)%  (9.3)%   (6.9)%   (5.4)%
 Clothing                                      (4.5)%  3.3%    4.4%    2.5%    (26.7)%  (7.5)%   0.4%
 Total Retail (excl. fuel)                     (1.2)%  0.1%    (0.7)%  1.3%    8.5%     5.2%     6.8%
 Fuel                                                                  4.9%    (56.1)%  (29.3)%  (29.0)%
 Total Retail (inc. fuel)                      (0.6)%  0.1%    (0.9)%  1.9%    (2.1)%   (0.4)%   1.7%

 

 

Strategic and operational highlights

We published a Strategy Update with our Interim Results in November, focused
on putting food back at the heart of Sainsbury's and are making encouraging
progress towards this:

Food First

 

·    We delivered strong food sales through the quarter. Basket sizes
increased as customers bought more of their shopping from Sainsbury's and we
grew our Food market share

·    We continue to lower prices on the products that matter most to
customers, with a particular focus on fresh foods. Last week we launched our
biggest ever Price Lock, covering over 2,500 products

·    Colleagues delivered excellent customer service throughout the key
Christmas weeks and customers felt safe shopping with us. Scores in
availability and friendliness of colleagues improved by 10 percentage points
and six percentage points respectively year-on-year

·      We are focused on offering exciting new products and bringing
them to our customers faster. Christmas innovations this year included Taste
the Difference Pink Prawn Roses, Pigs in Blankets Christmas Tree and flavoured
spirits such as Taste the Difference Blackfriars Winterberry & Clementine
Gin

·    Taste the Difference performed well over the quarter, with sales up
more than 11 per cent and we launched over 60 new Taste the Difference
Christmas products. Our meat-free range Plant Pioneers also outperformed the
market and customers bought more of our vegan centrepieces such as our No
Turkey Parcels and our No Beef Wellington

·    Groceries Online sales grew by 128 per cent year-on-year, accounting
for 18 per cent of grocery sales. We have more than doubled the number of
slots we can offer for home delivery and Click & Collect; Click &
Collect accounted for 24 per cent of online sales in the key Christmas week.
We have further increased the productivity of our online operation: as we
build order capacity from broadly the same fixed asset base, orders per van
continue to increase and pick rates have returned to pre-COVID levels

·    SmartShop self-scan accounted for 28 per cent of sales in stores with
handsets, leading to strong customer satisfaction scores in ease and speed of
checkout

·    We continue to invest to have the right stores in the right locations
for customers. We opened six new stores in the quarter, including two new
Neighbourhood Hub stores in Bishop's Waltham and Midhurst

 

Brands that Deliver

 

·    Argos sales grew by over eight per cent in the quarter, with nearly
90 per cent of sales starting online and Fast Track delivery grew by 62 per
cent

·    Argos growth was driven by a strong performance across a wide variety
of categories, with particularly good growth in Christmas gifting, gaming
consoles and TVs. This was despite a Black Friday performance which reflected
a continued reduction in promotional activity in favour of lower everyday
prices

·    Tu Clothing has grown market share in both value and volume, with
strong online growth

·    6.4 million people are now using digital Nectar and Nectar
participation at Argos remains ahead of expectations

·    Financial Services recovered from first half losses to book a profit
in the third quarter. We continue to expect to deliver an underlying profit in
the second half of the financial year to March 2021, driven by savings
pricing, benefits from cost actions and some cautious rebuilding of lending
volumes. The balance sheet remains strong with capital buffers exceeding
levels reported at our Interim Results in November. Levels of arrears are
lower than expected

 

 

(1 )Total retail (exc. Fuel) like-for-like sales, 9 weeks from 1 November 2020
to 2 Jan 2021.

(2 )The timing and mechanic by which we will forgo business rates relief is
still to be determined but we expect to recognise the forgoing of £410
million business rates relief relating to the financial year to March 2021 to
UPBT in this financial year (to March 2021).

 

Tim Fallowfield, Company Secretary and Corporate Services Director, was
responsible for the disclosure of this announcement.

 

Investor Relations
Enquiries
Media Enquiries

James Collins   +44 (0) 20 7695 0080
                Rebecca Reilly   +44 (0) 20 7695
7295

Notes

Certain statements made in this announcement are forward-looking statements.
Such statements are based on current expectations and are subject to a number
of risks and uncertainties that could cause actual events or results to differ
materially from any expected future events or results referred to in these
forward-looking statements. Unless otherwise required by applicable law,
regulation or accounting standard, we do not undertake any obligation to
update or revise any forward-looking statements, whether as a result of new
information, future developments or otherwise.

 

A conference call will take place at 09:15. To listen to the audio webcast we
recommend that you register in advance. To do so, please visit
https://www.about.sainsburys.co.uk/investors/results-reports-and-presentations
(https://www.about.sainsburys.co.uk/investors/results-reports-and-presentations)
prior to the event and follow the on-screen instructions. A transcript will be
available following the conference call.

 

Sainsbury's will announce its Preliminary Results for the financial year to
March 2021 on 28 April 2021.

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