REG - Sainsbury(J) PLC - Trading Statement

J SainsburyAnnouncement

10/01/2024 07:00

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RNS Number : 1673Z  Sainsbury(J) PLC  10 January 2024

10 January 2024

 

 

Third Quarter Trading Statement for the 16 weeks to 6 January 2024

Grocery volume growth driving continued market outperformance

 

 

Trading Highlights

More customers are doing more of their grocery shopping at Sainsbury's. We
have outperformed the market every week of this financial year and delivered
volume growth ahead of the market for a fourth consecutive Christmas. This
reflects consistently  great value and service, a positive customer response
to our first Nectar Prices Christmas and customers trading up to Taste the
Difference. While Argos outperformed a weak and highly promotional general
merchandise market, sales declined ahead of Christmas against an exceptionally
strong performance last year.

 

·    Q3 Grocery sales up 9.3%, Christmas Grocery sales up 8.6%, with
stronger volume growth offsetting lower inflation

·    Q3 General Merchandise sales down (0.6)%, up 1.5% excluding impact of
Argos closure in the Republic of Ireland

·    Christmas General Merchandise sales down (3.7)%, (1.3)% excluding
impact of Argos closure in the Republic of Ireland, reflecting significant
benefit to sales last year from the postal strike and strong demand for energy
saving products

·    Q3 Clothing sales down (1.7%), Christmas Clothing sales (6.0)%

·    Q3 retail (exc. fuel) sales up 6.5%. Like-for-like sales growth up
7.4%. Inc. fuel retail sales up 4.4% with fuel sales down (7.2)%

·    Outlook: We continue to expect underlying profit before tax in
2023/24 of between £670 million and £700 million, with a strong Grocery
performance offsetting weaker General Merchandise and Financial Services
contributions. We continue to expect to generate retail free cash flow in
2023/24 of at least £600 million

 

                                                 YoY Sales Growth
      Total sales performance                    Q3            Christmas

                                                 16 weeks to   6 weeks to

                                                 6 Jan 24      6 Jan 24
         Grocery                                 9.3%          8.6%
         General Merchandise*                    (0.6)%*       (3.7)%*
             Argos                               (0.9)%        (4.2)%
             Sainsbury's GM                      0.9%          (0.9)%
         Clothing                                (1.7)%        (6.0)%
         Total Retail (exc. fuel)                6.5%          4.9%
         Like-for-like sales (exc. fuel)         7.4%

* General Merchandise sales excluding the impact of the closure of Argos
stores in the Republic of Ireland were up 1.5% in the 16 weeks to 6 January
2024 and down (1.3)% in the 6 weeks to 6 January 2024

 

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

"We've worked hard to really deliver for our customers this quarter and have
grown grocery volumes ahead of the market for the fourth Christmas in a row.
More customers are choosing to shop at Sainsbury's, recognising our determined
focus on value, product innovation and service.

 

"This was our first Christmas powered by Nectar Prices, helping customers save
an average of £16 on an £80 Christmas shop. We delivered our best ever value
Christmas roast and customers bought record numbers of pigs in blankets, mince
pies and sparkling wine. Taste the Difference sales grew ahead of the market
as families treated themselves.

 

"Across the quarter, Argos performed ahead of competitors in a highly
promotional market. Argos delivered a strong Black Friday performance but a
weaker Christmas against an exceptional performance last year.

 

"Our success is down to our entire team who consistently deliver market
leading customer service. I'd like to thank every one of my colleagues and am
pleased we will be kicking off the new financial year with an industry leading
pay increase, investing a record £200 million to continue to pay the Real
Living Wage across the country.

 

"We enter 2024 with strong momentum and next month we will share our updated
strategy, building on all we've done to put food back at the heart of
Sainsbury's over the last three years. There is a lot to be excited about and
we remain absolutely committed to deliver for our customers, colleagues and
shareholders."

 

Strategic Highlights

Food First: Our consistent focus on delivering great value, innovation,
quality and service has driven sustained sales growth despite significantly
lower inflation, with volume growth ahead of the market every week since
March.(1)

 

Value:

·      Customers continue to recognise the consistent improvement of our
value offer, with our prices improving again versus competitors through the
quarter(2), supported by Nectar Prices on more than 6,000 products. For the
first time we offered our festive roast through Nectar Prices, feeding six for
less than £3 per person - our best value ever

·      Nectar participation reached 90 per cent on an £80 weekly shop
during the quarter with Nectar Prices helping customers to save £16 on
average during Christmas week

·      Our focus on fresh food really delivered over Christmas: we grew
volumes ahead of the market across the full basket, outperforming in Meat,
Fish, Poultry, Dairy, Fruit and Vegetables(3)

·      We donated every penny that customers spent on festive vegetables
to Comic Relief through our Nourish the Nation partnership. We have donated
£6 million through our community initiatives this quarter, helping to tackle
food poverty(4)

·      We've expanded Aldi Price Match this January to be bigger than
ever, including more than 550 essential everyday products

 

Innovation:

·      We launched over 370 new products this quarter including more
than 170 Taste the Difference products for Christmas. Standout new products
included our Taste the Difference Baos of Holly, Dry Cured Gammon with
Wildflower Honeycomb and Home for Christmas chocolate dessert

·      We outperformed the premium food market(5) and Taste the
Difference sales were up 13 per cent in the quarter as customers treated
themselves at home

·      We sold record volumes of Taste the Difference cheese in
Christmas week, reflecting investments in range, quality and enhanced displays
in many stores

·      We continue to innovate in packaging and recently announced we're
switching our mushroom punnets from plastic to cardboard. This will save over
775 tonnes of plastic per year - our biggest ever single product plastics
removal

 

Service:

·      The strength of our grocery performance reflected excellent end
to end execution, close relationships with our suppliers and outstanding
customer service in the lead up to Christmas. Product availability improved
significantly from investment in AI-driven demand forecasting technology. This
also resulted in smoother stockflows into stores, benefitting productivity

·      Our customer satisfaction scores are consistently ahead of
full-choice competitors, with leading scores on the things that matter most to
customers: quality, product availability, range, appealing offers, colleague
availability and speed of checkout(6)

·      Last week we announced our decision to invest £200 million to
offer a leading rate of pay for our colleagues, increasing the base rate for
retail colleagues to £12.00 per hour nationally and £13.15 per hour in
London from March. This is our biggest single investment into colleague pay
and represents an increase of 50 per cent over six years

·      Our focus on service in Groceries Online delivered improved
customer satisfaction(7) and more customers trusted us to deliver their
Christmas shop this year. We made it easier for customers to plan ahead by
releasing our Christmas home delivery slots in one go and extending our
delivery window on Christmas Eve

·      We have worked hard to deliver great fresh food availability for
customers while reducing the levels of unsold food in store. In line with our
commitment that no good food goes to waste, we have donated more than four
million meals through our front of store donation programme and our
partnership with Neighbourly. We have also committed to donating a further one
million fresh meals this Winter as part of the Coronation Food Project

 

Brands that Deliver: Argos outperformed(8) a highly promotional general
merchandise market over the quarter. Excluding the impact of the closure of
stores in the Republic of Ireland, Q3 sales increased 1.7 per cent, as
customers chose Argos for desirable brands, impactful deals, strong
availability and convenience. However, sales were weaker ahead of Christmas
against an exceptional performance last year when we benefitted significantly
from the postal strike and from strong demand for energy saving products.

·      We performed strongly over the Black Friday period with customers
looking to buy earlier for Christmas, particularly in Furniture, Electronics
and Toys categories

·      Tu clothing regained some momentum in a market that remains
highly promotional, partially reflecting unseasonably warm weather,
particularly over Christmas. Partywear and family Christmas pyjamas were
popular with customers

·      Financial Services performance continues to be impacted by net
interest margin compression, as we are not fully passing on higher funding
costs on bank deposits to customers

 

 

 Like-for-like sales performance   2022/23                         2023/24 YoY               2023/24 YoY exc. Argos ROI
                                   Q1       Q2      Q3     Q4      Q1       Q2       Q3      Q1          Q2          Q3
 Like-for-like sales (excl. fuel)  (4.0)%   3.7%    5.9%   7.8%    9.8%     6.6%     7.4%    10.0%       6.6%        7.4%
 Like-for-like sales (incl. fuel)  2.9%     7.7%    6.8%   5.9%    3.9%     2.2%     5.3%    4.0%        2.2%        5.3%

 Total sales performance           2022/23                         2023/24 YoY               2023/24 YoY exc. Argos ROI(9)
                                   Q1       Q2      Q3     Q4      Q1       Q2       Q3      Q1          Q2          Q3
 Grocery                           (2.4)%   3.8%    5.6%   7.4%    11.0%    8.9%     9.3%    11.0%       8.9%        9.3%
 Total General Merchandise         (11.2)%  1.2%    4.6%   7.6%    4.0%     (2.6)%   (0.6)%  4.9%        (0.6)%      1.5%
 GM (Argos)                        (10.5)%  1.6%    4.5%   9.3%    5.1%     (2.6)%   (0.9)%  6.1%        (0.1)%      1.7%
 GM (Sainsbury's)                  (14.6)%  (1.3)%  5.4%   (1.0)%  (1.2)%   (2.7)%   0.9%    (1.2)%      (2.7)%      0.9%
 Clothing                          (10.1)%  (0.2)%  1.3%   (1.9)%  (3.7)%   (14.6)%  (1.7)%  (3.7)%      (14.6)%     (1.7)%
 Total Retail (excl. fuel)         (4.5)%   3.1%    5.2%   7.1%    9.2%     5.8%     6.5%    9.3%        6.2%        7.1%
 Fuel                              48.3%    29.1%   12.2%  (2.8)%  (21.4)%  (17.1)%  (7.2)%  (21.4)%     (17.1)%     (7.2)%
 Total Retail (incl. fuel)         2.5%     7.2%    6.2%   5.4%    3.3%     1.5%     4.4%    3.5%        1.9%        4.9%

 

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 9:15 (GMT). This will
be available to view on our website at the following link:

https://sainsbury-q3-trading-statement-2023-24-analyst-q-a-call-jan-24.open-exchange.net/registration
(https://sainsbury-q3-trading-statement-2023-24-analyst-q-a-call-jan-24.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 host its Strategy Update on 7 February 2024.

 

Sainsbury's will announce its Preliminary Results for the year ending 2 March
2024 on 25 April 2024.

 

Enquiries

 

  Investor Relations      Media

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

 

1. Nielsen EPOS data - Sainsbury's weekly volume growth differential to
market. Weekly data from 5 March to 30 December 2023

2. Value Reality, Q3 2023/24 versus Q3 2022/23; Acuity, internal modelling

3. Nielsen EPOS YoY unit growth: Sainsbury's growth vs Total Outlets growth. 4
weeks to 23 December 2023

4. Nourish the Nation Q3 donation providing support to long-standing partner
Comic Relief, key food redistribution partners and local charities

5. Kantar Worldpanel - Premium tier volume performance 12 weeks to 24 December
2023

6. Competitor benchmarking survey. Q3 2023/24 Supermarket CSAT scores 12 weeks
to 9 December 2023

7. Competitor benchmarking survey. Q3 YoY Groceries Online CSAT scores 12
weeks to 9 December 2023 versus 12 weeks to 10 December 2022

8. BRC data, 3 months to 30 December 2023. Argos differential, Total NFNC
(exc. H&B & stationery) sales

9. General Merchandise sales excluding the impact of the closure of Argos
stores in the Republic of Ireland in the 6 weeks to 6 January 2024 were down
(1.3)% (Argos sales down (1.4)%, Total Retail exc. fuel sales up 5.5%)

 

 

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