REG - Sainsbury(J) PLC - Q3 Trading Statement

J SainsburyAnnouncement

11/01/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230111:nRSK3085Ma&default-theme=true

RNS Number : 3085M  Sainsbury(J) PLC  11 January 2023

11 January 2023

 

 

Third Quarter Trading Statement for the 16 weeks to 7 January 2023

Strategy delivering volume market share gains and record Christmas

 

Trading Highlights

Christmas and Q3 Grocery volume performance ahead of the market for the third
consecutive year(1), driven by investment in value, innovation, service and
availability. General Merchandise growth stronger than expected, reflecting
market share gains(2) as customers trusted Sainsbury's and Argos for value and
the speed and certainty of Argos Fast Track delivery and Click & Collect.

 

·    Q3 retail (exc. fuel) sales up 5.2%. Like-for-like sales up 5.9%,
reflecting inflation and relatively resilient volume trends

·    Q3 Grocery sales up 5.6% and General Merchandise sales up 4.6%.
Grocery sales 12.5% ahead of pre-pandemic levels

·    Christmas sales up 7.1%, with Grocery sales up 7.1%, General
Merchandise sales up 7.4% and Clothing sales up 5.1%

·    Profits expected to be towards upper end of guidance range £630m to
£690m(3)

·    Retail free cash flow expected to be around £600m, ahead of previous
guidance of at least £500m(4)

 

                                  YoY Sales Growth           Yo3Y Sales Growth
  Total sales performance         Q3            Christmas    Q3            Christmas

                                  16 weeks to   6 weeks to   16 weeks to   6 weeks to

                                  7 Jan 23      7 Jan 23     7 Jan 23      7 Jan 23
 Grocery                          5.6%          7.1%(5)      12.5%         14.7%
 General Merchandise              4.6%          7.4%         (6.9%)        (2.2%)
          Argos                   4.5%          7.1%         (5.0%)        (0.4%)
         Sainsbury's GM           5.4%          9.1%         (15.6%)       (10.0%)
 Clothing                         1.3%          5.1%         0.4%          14.6%
 Total Retail (exc. fuel)         5.2%          7.1%(5)      6.7%          9.6%
 Like-for-like sales (exc. Fuel)  5.9%

 

Simon Roberts, Chief Executive of J Sainsbury plc, said:

"We delivered the best possible Christmas for customers as millions of
households managed their budgets differently, hosting larger gatherings again
and treating themselves at home. Customers shopped early, buying Christmas
treats and fizz more than once and looked for deals, taking advantage of Black
Friday and other seasonal offers. Argos offered great value and quality and,
as train and postal strikes disrupted the country, customers appreciated its
reliability and convenience.

 

"We prioritised keeping our prices low and giving our customers great value at
Christmas. We went bold on the traditional fresh turkey roast dinner with all
the trimmings and dessert, which was the best value in the market at under £4
per head. Sales were also boosted by the World Cup as people celebrated more
at home. Our determined focus on delivering the best value alongside new and
exciting festive food plus outstanding customer service and availability meant
we delivered record sales, and market outperformance at both Sainsbury's and
Argos.

 

"We understand money will be exceptionally tight this year particularly as
many people wait for Christmas bills to land. We are working together with our
suppliers to battle cost inflation and we're keeping prices low again this
year with our biggest value campaign yet in January, price matching Aldi on
around 300 of our most popular products.

 

"Finally, a huge thank you to all my colleagues who really do make the
difference for our customers. We announced a market leading pay rise for our
front line colleagues last week to £11 per hour (£11.95 in London) and an
additional six months of free food in stores and depots. I am hugely grateful
to all our team and suppliers for their hard work and support in delivering
these results."

 

Outlook

Investment in value, innovation, service and product availability delivered
stronger volume trends across Grocery and General Merchandise, particularly at
Christmas. We will additionally benefit from finance costs around £15 million
lower than previously guided, broadly offset by the cost of a significant
colleague pay increase ahead of the year end annual pay review. As a result,
while we remain cautious on the consumer backdrop, we now expect underlying
profit before tax for the year to March 2023 to be towards the upper end of
the guidance range of £630 million to £690 million. We additionally expect
to generate retail free cashflow of around £600 million, ahead of our
previous guidance of at least £500 million.

 

Strategic Highlights

Food First: Our strategic investments in value, innovation, service and
availability have driven volume market share gains over Q3 and the key
Christmas period(6), with customers choosing Sainsbury's to help them create a
special celebration.

Value:

·      We continue to inflate behind the market(7) and have improved our
value position against all key competitors(8). In November we accelerated our
value plan and announced a further £50 million investment in low prices by
March 2023, bringing the total investment to £550 million

·      We delivered our most competitive Christmas ever, leading the
market with our great value Christmas roast dinner which was priced at less
than £4 per person. We performed strongly over Christmas on key fresh food
products, with market share outperformance in Meat, Fish and Poultry, and
Fruit and Vegetables(9)

·      Our Own Brand ranges performed strongly, as customers looked for
great value as well as festive treats, with overall sales growth of 10 per
cent(10), and our entry price product range was the fastest growing sub-brand

·      We have extended Aldi Price Match this January, now bigger than
ever with around 300 products, including more than 180 fresh products and
important household staples such as nappies, cereals and canned soups

Innovation

·      We launched 300 new products for Christmas, including 145 Taste
the Difference products and celebrated many Taste Test wins. Standout new
products included our Taste the Difference Mulled Cider Glazed Gammon Joint,
Salted Caramel and Belgian Chocolate Wreath and Cherry and Almond Panettone

·      Taste the Difference outperformed our full choice supermarket
competitors' premium ranges(11), with sales up 10 per cent year on year and 27
per cent over three years(12), as customers treated themselves while
celebrating Christmas at home

·      Taste the Difference Mince Pie sales increased 22 per cent, Taste
the Difference Panettone sales increased 49 per cent, and we had record sales
for Champagne and prosecco as customers shopped our market leading offers on
sparkling wines(13)

·      In January we launched Flourish, a new brand with a focus on
helping customers to eat better, with tasty and healthy options such as
salads, ready meals, fresh soups and smoothies

Service:

·      We invested in service and availability to deliver a great
Christmas offer, recruiting over 25,000 new colleagues to Sainsbury's and
Argos this Christmas and working more closely with our suppliers than ever to
deliver significant improvements in availability. This supported leading
supermarket customer satisfaction scores(14)

·      We released Groceries Online Christmas home delivery slots five
weeks earlier than last year and delivered on Christmas Eve for the first
time. Customer satisfaction in Groceries Online for Christmas week improved
against last year(15)

·      We brought forward our annual pay increase and last week
announced a further £185 million investment in colleague pay and benefits,
increasing the base rate for our retail colleagues to £11 per hour nationally
and £11.95 in London from February

 

Brands that Deliver: Argos continues to gain market share(2) in a tough
general merchandise market, reflecting a reputation for value, great product
availability and the certainty for customers of Argos for Fast Track home
delivery and Click & Collect fulfilment.

·      Argos performed exceptionally well over the key Christmas week as
customers turned to our stores in supermarkets for great value and reliable,
last minute Christmas gifting

·      Sales of technology products were particularly strong, driven by
improved availability and promotional activity in the run up to the Football
World Cup. Household categories performed well as customers bought energy
saving items such as air fryers and heated laundry airers and Habitat branded
products outperformed in home and furniture

·      We started our Black Friday awareness campaign earlier this year
and delivered sales ahead of last year, with over 120 million visits to the
Argos website over the campaign period(16) and 15,000 orders processed per
hour on Black Friday itself

·      Cold weather towards the end of the quarter drove an uplift in
sales for Tu Clothing, with knitwear and Christmas pyjamas particularly
popular with customers

·      We helped customers to boost their Nectar point balances with
enhanced personalised product offers on the Nectar app during the lead up to
Christmas and almost 900,000 customers redeemed their points in Sainsbury's
during Christmas week

·      We expanded the Nectar360 Retail Media network, announcing an
innovative Connected TV partnership with Channel 4

·      Financial Services has benefited from a continued increase in
demand, offset by increased provisioning due to the subdued economic outlook

 

Plan for Better:

·      We launched our Nourish the Nation community programme in
November through which we are donating £4 million to Comic Relief, FareShare
and other key redistribution partners to support local community food projects

·      We continue to work in partnership with Neighbourly and over the
Christmas period(17) our stores connected with local partners to redistribute
over 930,000 meals to those in need

·      This festive season, we removed single-use plastic lids from our
Christmas own-brand brandy butter and brandy cream range, saving 679,000
pieces of plastic. We also replaced plastic with foil trays for turkey crowns,
saving over 210,000 pieces of plastic

 

 Like-for-like sales performance   2021/22                            2022/23 YoY
                                   Q1      Q2       Q3       Q4       Q1       Q2      Q3
 Like-for-like sales (excl. fuel)  1.6%    (1.4%)   (4.5%)   (5.6%)   (4.0%)   3.7%    5.9%
 Like-for-like sales (incl. fuel)  8.4%    3.0%     0.6%     2.7%     2.9%     7.7%    6.8%

 Total sales                       2021/22                            2022/23 YoY             2022/23 Yo3Y

 performance
                                   Q1      Q2       Q3       Q4       Q1       Q2      Q3     Q1       Q2       Q3
 Grocery                           0.8%    0.8%     (1.1%)   (1.6%)   (2.4%)   3.8%    5.6%   8.7%     10.1%    12.5%
 Total General Merchandise         (1.4%)  (11.4%)  (16.0%)  (21.1%)  (11.2%)  1.2%    4.6%   (6.2%)   (3.6%)   (6.9%)
 GM (Argos)                        (3.7%)  (12.0%)  (16.1%)  (20.4%)  (10.5%)  1.6%    4.5%   (4.5%)   (0.9%)   (5.0%)
 GM (Sainsbury's)                  11.2%   (8.0%)   (15.7%)  (24.1%)  (14.6%)  (1.3%)  5.4%   (13.8%)  (15.5%)  (15.6%)
 Clothing                          57.6%   9.2%     (2.7%)   (9.3%)   (10.1%)  (0.2%)  1.3%   3.9%     0.8%     (0.4%)
 Total Retail (excl. fuel)         1.6%    (1.7%)   (5.3%)   (6.2%)   (4.5%)   3.1%    5.2%   5.4%     6.7%     6.7%
 Fuel                              95.1%   36.1%    47.5%    80.1%    48.3%    29.1%   12.2%  26.9%    24.2%    16.2%
 Total Retail (incl. fuel)         8.5%    2.7%     (0.1%)   2.2%     2.5%     7.2%    6.2%   8.9%     9.6%     8.0%

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 webcast presentation and live Q&A will be held at 9:30 (GMT). This will
be available to view on our website at the following link:
https://sainsbury-s-q3-trading-statement-2022-23.open-exchange.net/registration
 
(https://sainsbury-s-q3-trading-statement-2022-23.open-exchange.net/registration)
 

 

A recorded copy of the webcast and Q&A call, alongside slides and a
transcript of the presentation will be available at
www.about.sainsburys.co.uk/investors/results-reports-and-presentations
(http://www.about.sainsburys.co.uk/investors/results-reports-and-presentations)
following the event.

 

Sainsbury's will announce its Preliminary Results for the year ending 4 March
2023 on 27 April 2023.

 

Enquiries

 

  Investor Relations      Media


  James Collins          Rebecca Reilly
  +44 (0) 7801 813 074    +44 (0) 20 7695 7295

(1) Kantar Worldpanel division, Christmas = 4 weeks to 25 December 2022, 26
December 2021, 27 December 2020 and 29 December 2019. Total Grocery volume
growth. Q3= 12 weeks to 25 December 2022, 26 December 2021, 27 December 2020
and 29 December 2019.

2 BRC data, 5 weeks to 31 Dec 2022. Argos differential, Total NFNC (exc.
H&B & stationery) sales

3 Underlying profit before tax for the financial year to March 2023

4 Retail free cash flow for the financial year to March 2023

5 Stores were open on Boxing Day 2022, but closed on Boxing Day 2021,
contributing 0.9% Grocery sales growth to the 6 week Christmas period

6 Kantar Worldpanel division, Christmas = 4 weeks to 25 December 2022 vs 26
December 2021. Q3 = 12 weeks to 25 December 2022 vs 26 December 2021

7 Nielsen panel data, Top 100 SKUs by retailer. Average Selling Price YoY
growth. 52 weeks to 10 December 2022

8 Value Reality. Sep-Jan 2023 vs Sep - Jan 2022; Edge by Ascential; internal
modelling

9 Nielsen EPOS YoY unit growth: Sainsbury's growth vs Total Outlets growth for
Meat, Fish Poultry and Produce categories. 4 weeks to 24 December 2022

10 Own Brand sales growth on a YoY basis: 6 weeks to 7 January 2023

11 Kantar world panel - Premium tier value performance 4 weeks to 25 December
2022

12Taste the Difference sales growth on a YoY and Yo3Y basis: 4 weeks to 24
December 2022

13 Taste the Difference Mince Pies and Panettones sales growth on a YoY basis:
16 weeks to 7 January 2023

(14) Competitor benchmarking survey. Q3 22/23 Supermarket CSAT scores 12 weeks
to 10 December 2022.

(15) Sainsbury's CSAT programme, Lettuce Know, Groceries Online overall score
YoY for 1 week ended 24 December 22 vs 25 December 21

16 Black Friday Campaign: 2 to 29 November 2022

17 Christmas period = December

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTBIGDBRXBDGXG