REG - Sainsbury(J) PLC - Trading Statement

J SainsburyAnnouncement

10/01/2025 07:00

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RNS Number : 8273S  Sainsbury(J) PLC  10 January 2025

10 January 2025

 

Third Quarter Trading Statement for the 16 weeks to 4 January 2025

Winning share at Christmas for the fifth consecutive year as more customers
choose Sainsbury's

 

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

 

"We have won grocery market share for the fifth consecutive Christmas, with
more customers choosing Sainsbury's for their big shop. Driven by our leading
combination of quality, value and service, we have achieved seven consecutive
quarters of volume performance ahead of the market and further accelerated our
two-year volume growth.

 

"The strength of our customer service and operational performance stood
us apart in delivering our biggest ever Christmas.  Customers shopped later
than ever and we achieved our highest ever sales in the final days before
Christmas. I would like to recognise and thank all of our colleagues who
worked so hard to deliver record customer satisfaction and our suppliers who
helped us deliver our best ever Christmas availability.

 

"Customers trust Sainsbury's to deliver great quality food and drinks. Over
half of big Christmas baskets contained a Taste the Difference product,
helping Taste the Difference deliver sales growth of 16 per cent,
outperforming all key competitors. Customers chose Sainsbury's for their big
festive celebrations with party food sales up nearly 40 per cent and more than
200 bottles of fizz sold every minute in the key days ahead of Christmas, over
one third of which were Taste the Difference. Customers are also recognising
our consistently strong value more and more, helped by record numbers of
customers shopping Nectar Prices, driving gains from competitors as we attract
new big basket customers to Sainsbury's.

 

"Our people are fundamental to achieving our Next Level Sainsbury's plan and
we are pleased to announce that we will raise pay for our hourly-paid
colleagues by five per cent in the year ahead, split into two separate
increases to help manage a particularly tough cost inflation environment. We
believe in rewarding our colleagues well for delivering leading service and
productivity and we will be the best paying UK grocer from March."

 

                                                                      YoY Sales Growth
      Total sales performance                                         Q3            Christmas

                                                                      16 weeks to   6 weeks to

                                                                      4 Jan 25      4 Jan 25*
         Sainsbury's                                                  3.7%          3.8%
             Grocery                                                  4.1%          3.8%
             Sainsbury's General Merchandise and Clothing             (0.1)%        3.4%
         Argos                                                        (1.4)%        1.1%*
         Total Retail (exc. fuel)                                     2.7%
         Like-for-like sales (exc. fuel)                              2.8%

*Argos Christmas sales growth of 1.1% is shown for the 8 weeks to 4 January
2025 so that both years' periods include Black Friday trading. For the 6 weeks
to 4 January 2025, Argos sales were up 10.2%

 

2024/25 Outlook

·      We expect to deliver full year Retail underlying operating profit
in line with consensus and the midpoint of our £1,010-£1,060 million
guidance range, representing growth of around seven per cent

·      This reflects continued operating leverage from Sainsbury's
grocery volume growth, strong growth in Nectar profit contribution and
delivery of cost saving targets

·      We now expect total Financial Services underlying operating
profit to be around £30 million (previous guidance: between £15 million and
£25 million)

·      We continue to expect to generate Retail free cash flow of at
least £500 million

 

Strategic Highlights

First choice for food: We have continued to deliver industry-leading customer
service(1), consistently great value and outstanding quality, driving
sustained grocery volume growth in stores and online and further market
outperformance(2) against tough comparatives.

·      With customers shopping late and record volumes in the days ahead
of Christmas, we were determined to deliver excellent availability and service
for customers. We made targeted investments in stores and online and delivered
our highest ever Christmas customer satisfaction scores both online and in
supermarkets(3)

·      Value perception continues to improve(4), reflecting the ongoing
consistency of our value position and supported by Nectar Prices on more than
9,000 products, driving record Nectar sales participation. More and more
customers are choosing us for their big weekly shop(5) as a result, driving
switching gains(6) and market outperformance(2). We additionally launched Aldi
Price Match in our Convenience stores in November, an industry first which has
been very well received by customers, driving a strong sales response and
improved Value for Money customer satisfaction(7)

·      We continued to build on our reputation for great quality. Over
300 new Taste the Difference products helped our premium range deliver sales
growth of 16% in the key Christmas weeks(8), ahead of the market and all key
competitors(9), and our fresh food sales across fruit, vegetables, meat, fish
and poultry outperformed the market throughout the quarter(10)

·      General merchandise and clothing sales were broadly stable year
on year. Clothing sales grew by 2.2%, outperforming the market and all
supermarket competitors(11), reflecting significant improvements in range and
availability. This was offset by lower general merchandise sales, as we
accelerate our space reallocation programme and focus on full-price seasonal
sales

·      We are donating every penny that customers spent on by
Sainsbury's and Free From classic mince pies during December to Comic Relief
through our Nourish the Nation partnership, raising over £4 million through
community initiatives. This will help us donate over five million meals over
the Winter as part of our mission to make good food accessible to all

 

Loyalty everyone loves: Our second Nectar Prices Christmas delivered
outstanding value for customers and record Nectar sales participation(12). We
continue to deliver strong growth in Nectar360 revenues as retail media income
grows and we remain on track to deliver incremental profit of at least £100
million in the three years to FY26/27.

·      We extended the reach of Nectar Prices during the quarter to
cover more promotional mechanics, including our 25% off 6 wine offer, helping
customers to save an average of £26 on big basket shops during Christmas
week.

·      More than one million participated in our annual Count up to
Christmas campaign, collecting additional points to spend over the festive
period

 

More Argos, more often: Continued improvements to our digital proposition,
delivery offers, product and promotions delivered positive traffic trends and
sales growth in the key Black Friday and Christmas weeks. However, this was
more than offset by the impact on sales and gross margins of subdued customer
spending outside these key periods and a highly promotional environment.

·      Customer satisfaction scores have improved in key areas such as
appealing promotions, variety of items, product availability and ease of using
our website(13), reflecting actions we have taken to extend the breadth of our
range, enhance our digital experience and highlight great value. One in four
people in the UK visited the Argos website over Black Friday weekend, a
significant increase year on year

·      Over the quarter, sales were strongest in technology, while the
toy market was weak and customer demand in bigger ticket categories including
furniture and larger consumer electronics remained subdued

 

Save and invest to win: In an environment where offsetting operating cost
inflation is increasingly important, we continue to make good progress against
our target to deliver £1 billion of cost savings by March 2027 through
investing in our customer proposition, productivity and operations, whilst
driving higher returns.

·      Our investments in checkout technology continue to deliver, with
customers using SmartShop handheld self-scanning technology on around 30 per
cent of grocery volumes over the peak period, delivering cost savings and
higher speed of checkout customer satisfaction in the key peak Christmas week

·      Having completed the roll-out in Food of AI-driven demand
forecasting technology, we delivered our best ever product availability
through the key peak period

·      We continue to improve depot productivity through investments in
technology, process and capability

·      We believe that happy, well engaged colleagues deliver great
customer service and so today we announced our decision to increase pay for
retail colleagues by five per cent this year, split into two increases in
March and August. This will allow us to navigate a challenging cost
environment while ensuring we continue to lead the sector in how we reward our
brilliant colleagues. Colleagues across both Sainsbury's and Argos will move
to £12.45 per hour in March, and £13.70 for those based in London, with a
further increase to £12.60 per hour in August and £13.85 for those based in
London

 

 Like-for-like sales performance      2023/24                                         2024/25
                                            Q1          Q2          Q3          Q4          Q1          Q2             Q
                                                                                                                       3
 Like-for-like sales (exc. fuel)      9.8%        6.6%        7.4%        4.8%        2.7%        4.2%        2.8%
 Like-for-like sales (inc. fuel)      3.9%        2.2%        5.3%        2.9%        2.4%        1.9%        0.0%

 Total sales performance              2023/24                                         2024/25
                                            Q1          Q2          Q3          Q4          Q1          Q2             Q
                                                                                                                       3
 Sainsbury's                          9.9%        7.5%        8.4%        6.5%        4.2%        5.1%        3.7%
   Grocery                            11.0%       8.9%        9.3%        7.3%        4.8%        5.3%        4.1%
   GM (Sainsbury's) & Clothing        (2.5)%      (8.7)%      (0.3)%      (5.5)%      (4.3)%      2.2%        (0.1)%
 Argos (inc. ROI)                     5.1%        (2.6)%      (0.9)%      (6.6)%      (7.7)%      (1.4)%      (1.4)%
 Total Retail (exc. fuel)             9.2%        5.8%        6.5%        4.3%        2.3%        4.1%        2.7%
 Fuel                                 (21.4)%     (17.1)%     (7.2)%      (7.8)%      0.4%        (10.6)%     (17.4)%
 Total Retail (inc. fuel)             3.3%        1.5%        4.4%        2.4%        2.1%        1.9%        0.0%

 Total sales performance -            2023/24                                         2024/25

 previously reported categorisation
                                            Q1          Q2          Q3          Q4          Q1          Q2             Q
                                                                                                                       3
 Total General Merchandise:           4.0%        (2.6)%      (0.6)%      (5.6)%      (7.3)%      (1.7)%      (1.5)%
   GM (Sainsbury's)                   (1.2)%      (2.7)%      0.9%        0.4%        (5.3)%      (3.3)%      (2.3)%
   GM (Argos)                         5.1%        (2.6)%      (0.9)%      (6.6)%      (7.7)%      (1.4)%      (1.4)%
 Clothing                             (3.7)%      (14.6)%     (1.7)%      (11.7)%     (3.3)%      8.3%        2.2%

 

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 09:15 (GMT). This will
be available to view on our website at the following link:

https://sainsburys-q3-trading-update.open-exchange.net/registration
(https://sainsburys-q3-trading-update.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 1 March
2025 on 17 April 2025.

 

Enquiries

  Investor Relations      Media

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

 

 

1 Competitor Benchmark data, Overall Satisfaction, supermarkets, Q3 24/25

2 Kantar Panel, Total FMCG (exc. Kiosk and Tobacco), Volume growth vs the
Market, 16 weeks to 29 December 2024

(3) Lettuce Know, Christmas week commencing 22(nd) December 2024, Supermarket
overall satisfaction. Since start of LK programme

4 YouGov Brand Index - Supermarket Value for Money Perception metric net %,
Value metrics, Q3 24/25 YoY

5 Kantar Panel, Total FMCG (excl K&T), Shoppers numbers YoY growth , Main
shop mission, 12w to 1(st) Dec 2024

6 Kantar Panel data. Total FMCG (exc. Kiosk and Tobacco). Retailer to/ from
net volume switching, 16 weeks to 29 December 2024

7 Lettuce Know - Q3 2024/25 Convenience scores, Value for Money

8 Internal Taste the Difference sales data, 4 weeks to 4(th) January 2025

9 Kantar Panel, Total FMCG (exc. Kiosk and Tobacco), Premium Own Label tier,
YoY % value growth, 4 weeks to 29 December 2024

(10) Kantar Panel, Total FMCG (exc. Kiosk and Tobacco), YoY % Fresh value
growth by category, 16 weeks and 4 weeks to 29 December 2024

1(1) Kantar Panel, Total Clothing, Footwear and Accessories. Retailer share of
value - YoY% share gains. 12 weeks to 8 December 2024

(12) Nectar participation - Supermarkets and Groceries Online

(13) Customer Satisfaction - Argos, Q3 2024/25 YoY scores, Appealing
promotions, Availability of products, Ease of using website and Variety of
items

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