REG - Sainsbury(J) PLC - Final Results
17/04/2025 07:00
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RNS Number : 3681F Sainsbury(J) PLC 17 April 2025
17 April 2025
J Sainsbury Plc
Preliminary Results for the 52 weeks ended 1 March 2025
Next Level strategy delivering strong momentum; committed to continued
outperformance
Simon Roberts, Chief Executive of J Sainsbury plc, said: "We've transformed
our business over the past four years. We have created a winning combination
of value, quality and service that customers love, investing £1 billion in
lowering our prices. More people are choosing Sainsbury's for their main
grocery shop as a result, delivering our highest market share gains in more
than a decade. We are committed, above all else, to sustaining the strong
competitive position we have built - consistently giving customers the great
value they have come to expect from Sainsbury's - and we expect to continue to
outperform the market.
"Our customer offer is the strongest it has ever been. We've expanded Aldi
Price Match to more products than ever before in addition to offers on more
than 9,000 products with Nectar Prices. Customer satisfaction with product
availability is at record levels and we're continuing to add more new,
innovative products to our ranges. Nectar is taking our ability to create
personalised value and loyalty to the next level and our long-term contracts
with farmers and suppliers demonstrate our commitment to resilience and
sustainability across the UK food system.
"Our belief in the strength of Sainsbury's offer has driven our decision to
make our largest investment in expanding our store space in over a decade as
we open supermarkets in key new locations and extend food space within many of
our existing stores. It's also why we continue to invest in our colleagues,
whose dedication will power our Next Level plan. Working together with our
suppliers we will continue to deliver for our customers, our shareholders and
the communities we serve."
Financial Highlights
· Sainsbury's FY sales (excluding fuel) £26.6bn, up 4.2%, Argos FY sales
£4.9bn, down (2.7)%, Fuel FY sales £4.7bn, down (8.9)%
· Strong year-end sales momentum, with growth in all our brands: Sainsbury's Q4
sales up 4.1% and Argos Q4 sales up 1.9%, reflecting continued improvement in
online traffic trend
· Retail underlying operating profit £1,036m, up 7.2%, with double-digit growth
at Sainsbury's partially offset by lower profits at Argos
· Statutory profit after tax £242m, up 77%. Non-underlying items of £(297)m on
a post-tax basis predominantly relate to the restructuring of the Financial
Services division and Retail restructuring costs
· Retail free cash flow of £531m, in line with guidance to deliver at least
£500m
· £200m share buyback programme complete; full-year dividend of 13.6 pence, up
4% year-on-year
2025/26 Share Buyback and Special Dividend
· Reflecting the strength of our balance sheet, we will buy back at least £200m
of shares in 2025/26 and we expect to return bank disposal proceeds of £250m
via special dividend in the second half of the year. The special dividend will
be accompanied by a proposed share consolidation
· Any distributable bank disposal proceeds in excess of £250m will be used to
enhance the share buyback above a core £200m base
Financial Summary 2024/25 2023/24 YoY
Business performance
Retail sales (inc. VAT, excl. fuel) £31,555m £30,615m 3.1%
Retail underlying operating profit £1,036m £966m 7.2%
Total Financial Services underlying operating profit* £30m £29m 3.4%
Underlying profit before tax* £761m £701m 8.6%
Total underlying basic earnings per share* 23.1p 22.1p 4.5%
Proposed full-year dividend per share 13.6p 13.1p 3.8%
Net debt (inc. lease liabilities) £(5,758)m £(5,554)m £(204)m
Non-lease net debt £(264)m £(200)m £(64)m
Return on capital employed* 9.0% 8.3% 70bps
Statutory performance
Group revenue (excl. VAT, inc. fuel) £32,812m £32,238m 1.8%
Profit after tax £242m £137m 76.6%
o/w Continuing operations £420m £308m 36.4%
o/w Discontinued operations £(178)m £(171)m (4.1)%
Total basic earnings per share* 10.4p 5.9p 76.3%
Net cash generated from operating activities (continuing) £1,364m £2,113m £(749)m
*On a total basis inclusive of discontinued operations
2025/26 Outlook
· We have made four years of exceptional progress and investment, resetting our
value proposition and strengthening the fundamentals of our business. This
puts us in a strong competitive position and we are committed to sustaining
this in the year ahead. We expect to continue to grow grocery volumes ahead
of the market and we have started the year with good trading momentum across
all our brands. We expect to deliver Retail underlying operating profit of
around £1 billion and Retail free cash flow of more than £500 million
· Profit delivery will be supported by continued growth in Nectar profit
contribution and industry-leading cost saving delivery and will be weighted
more towards the second half versus last year, reflecting the timing of
benefits from space reallocation activity and new store openings
Building on strong foundations
The first year of our Next Level Sainsbury's strategy has built on the success
of our Food First strategy, delivering further grocery market share gains(1)
and significant operating leverage. This reflects the investments we have made
over the last four years to improve our grocery proposition. We have built
resilience and sustainable competitive advantage through strengthening the
fundamentals of the business across logistics, technology and the way we work
with suppliers.
As a consequence, we are winning more big basket primary customers(2),
providing us with the confidence to accelerate our plans to bring more of the
Sainsbury's food range to more customers. We have acquired 14 new supermarket
sites in key target locations. Together with further new supermarket openings
and expanding food space in our supermarkets through space reallocation, this
provides a unique opportunity to drive further market share gains.
The strength of our balance sheet and cash generation are key strategic
assets, allowing us to invest capital to remain competitive, drive growth and
efficiency and build competitive advantage while also delivering strong
returns to shareholders. During the year we invested £825 million of capital
in the business and have returned more than £500 million of our £531 million
Retail free cash flow to shareholders, completing our share buyback programme
of £200 million and paying ordinary dividends of £308 million. The strength
of our balance sheet was recognised by S&P and Moody's giving public
investment grade ratings in January 2025 and we issued £550 million of
unsecured fixed income bonds, our first unsecured bond issue in 21 years.
We have further sharpened our focus on our core grocery business over the last
year, through the announcements of the sale of Sainsbury's Bank's core banking
and ATM businesses and the sale of the Argos Financial Services cards
portfolio.
As we announced in January, we have made changes within our Operating Board to
recognise the different needs of the Sainsbury's and Argos businesses and have
reorganised our store support centre teams to reflect the distinction between
the two. Rhian Bartlett, Chief Commercial Officer for Sainsbury's, now leads
our commercial proposition across grocery, Sainsbury's general merchandise and
clothing. To ensure a clear focus on delivering our More Argos, more often
plan, Graham Biggart has taken on the role of Managing Director for Argos.
These changes are driving faster decision making and improved performance for
both Sainsbury's and Argos.
Across the business, we are focused on delivering on the eight commitments
that we made in February 2024:
· Food volume growth ahead of the market · Deliver profit leverage from sales growth
· Customer satisfaction higher 26/27 vs 23/24 · £1bn of cost savings over three years to 26/27
· Colleague engagement higher 26/27 vs 23/24 · £1.6bn+ Retail free cash flow over three years to 26/27
· Deliver our Plan for Better commitments · Higher return on capital employed
Our progress against these commitments will be driven by our four strategic
outcomes: First choice for food, Loyalty everyone loves, More Argos, more
often and Save and invest to win.
First choice for food
We have delivered a record-breaking year in grocery, outperforming the market
every quarter for a second consecutive year(3) and making our biggest market
share gains in more than a decade(4) as more customers come to Sainsbury's for
their big trolley shop(5). Our winning combination of outstanding quality,
great value and leading service really resonates with customers, driving a
significant increase in loyalty, with primary customer numbers 18 per cent
higher than four years ago(2). We have consistently grown volumes across
supermarkets, convenience stores and online grocery, as we show up for
customers however they want to shop, with great availability and inspiring
product innovation across the full basket.
With these strong foundations and our leading customer proposition now firmly
re-established, we are moving forward with confidence, delivering more of our
food range to more customers through allocating more space to food in our
existing stores, as well as our biggest growth in new supermarket space in
over a decade. We expect this to contribute to sustained volume outperformance
versus the market while we will also further enhance our customer proposition
and grow our personalisation capabilities.
More customers are shopping with us for their big trolley shops as we
consistently deliver our winning combination
· We are building stronger customer loyalty and successfully converting
Secondary to Primary customers(6) who really trust Sainsbury's as their first
choice for their big trolley shop, driving the biggest share gains in the
market for the main shop mission(7)
· Our commitment to consistently delivering great value across the basket has
driven a sustained improvement in our competitive value position(8) and a
significant improvement in customers' perception of the value we offer(9). We
continue to prioritise price investment in the items that matter most to
customers and were the first retailer to have extended our Aldi Price Match
campaign across supermarkets, convenience stores and online. We have rolled
out our Nectar Prices offer to over 9,000 products and we are enhancing our
capabilities in personalised value through Your Nectar Prices, delivering
uniquely-targeted discounts on the products customers buy most often
· We continue to work closely with our suppliers to develop innovative and
high-quality products. We launched more than 1,300 new products over the
course of the year, of which more than 600 were Taste the Difference. Taste
the Difference sales grew 15 per cent, with a particularly strong performance
in Fresh categories
· Customers trust us to deliver outstanding quality at affordable prices as they
are dining-in more at home and trading up to Taste the Difference more often,
with one in three baskets now including a Taste the Difference product(10). We
continue to outperform the market at every key event(11) and Taste the
Difference remains the fastest growing premium own label in the market(12). In
the year ahead we will celebrate Taste the Difference's 25(th) birthday,
coinciding with our ambition to achieve more than £2 billion of sales in our
biggest and best year for Taste the Difference yet
· Through strengthening our relationships with suppliers and migrating our food
products to a machine learning forecasting platform, we have delivered
significant improvements in availability, growing food availability levels by
190 basis points over the last four years. As a result, we have achieved the
biggest improvement in customer satisfaction for availability of all major
competitors over the same time period(13)
· We continue to deliver outstanding customer service, with our overall
satisfaction scores consistently ahead of the other full-choice grocers(14).
We believe that happy, well engaged colleagues deliver great customer service
and in January we announced our investment in an above inflation pay award for
our colleagues, leading the industry for the third year in a row. Over the
last three years, we've invested half a billion pounds in increased colleague
pay and benefits
Growing food space to bring more of our range to more customers, with bold
acceleration in our space growth ambitions for 2025/26
· We are building on the strength of our grocery performance and our winning
combination of quality, value and service to bring more Sainsbury's food to
more customers in more locations and improving ranges, customer experience and
the efficiency of many of our existing stores
· During the year we acquired 14 new supermarket sites in key target locations
from Homebase and Co-op, the majority of which we expect to convert and open
in 2025/26. Combined with our organic store opening programme, we expect to
open a total of 15 supermarkets during 2025/26 and over the next two years our
new supermarket openings will add over 400,000 sq ft of new space, our most
significant investment in new supermarket space for many years. We also expect
to add another 25 new convenience stores in each of the next two years. This
will bring over 700,000 more people within a ten-minute drive of a Sainsbury's
store
· We are making good progress with our three-year 'More for More' plan,
investing in our supermarkets to make more of our food range available to more
customers by rebalancing space, adding around 90,000 sq ft of food space in
2024/25, weighted to the second half. We are planning to add another 90,000 sq
ft of food space in 2025/26. We are seeing positive early results in invested
stores with benefits expected to build through the second half of 2025/26 and
beyond as we annualise periods of disruption, learning as we go to ensure we
optimise our stores for customer experience, trading intensity and ROCE. We
are making more of our range and proposition accessible to more customers,
enabling simpler shopping missions with better digital capabilities across our
supermarkets
· In January, we announced a number of propositional changes to food services in
our stores in order to drive growth and availability at a reduced cost to
serve, allowing us to create further space to offer more fresh food ranges. By
early Summer we will have closed patisserie, hot food and pizza counters and
are making the most popular items available in aisles. We have now closed all
remaining Sainsbury's Cafés and we are converting our scratch bakeries to
bake-off, driving improvements in quality, value and availability throughout
the day. From the Autumn, we will create new On the Go hubs with flexiserve
hot food offerings, delivering an improved customer experience
· Taking all of these elements of space growth: new stores, rebalancing existing
store space and propositional resets, we expect to grow total food space in
Sainsbury's by nearly three per cent in 2025/26
Delivering for customers online and in our convenience stores
· We have transformed our convenience stores during the year by reconfiguring
space and optimising range across our entire Convenience estate, bringing more
products to customers and delivering a simpler, faster shopping experience.
This has helped to drive convenience sales growth of nearly four per cent in
2024/25 and market share growth of 20 basis points(15). We also launched Aldi
Price Match in our convenience stores in November and were the first grocer to
do so, resulting in a rapid and significant improvement in value for money
customer satisfaction scores(16)
· We are investing in developing new format stores to better serve specific
customer missions, opening our first airport store, at Edinburgh airport, and
four new format stores in recent months. Features in these latest stores
include a higher proportion of chilled food space, digital screens and
increased security features
· Groceries Online sales increased seven per cent year on year. More customers
are doing their online grocery shopping with us and are benefiting from the
investments we have made in improving the digital customer journey, including
better showcasing our product ranges and improving the relevance of suggested
basket additions. This has been a key driver of increased basket size, greater
frequency of visits and improved customer satisfaction. Groceries Online
delivered the highest customer satisfaction growth of all channels, with
customers particularly recognising our improved availability as well as
appealing promotions through personalised Your Nectar Prices(17)
· Growth in our OnDemand rapid delivery channel remains very strong, with sales
growth of around 80 per cent in the year. We have strengthened our long-term
partnerships with external providers and have now successfully rolled out the
offer to over 1,200 locations. We are now able to serve more than 65 per cent
of the population via this channel, a significant increase year on year
· We have a strong track record in reducing cost to serve in our online
operations. Together with an increasing contribution from our fast-growing and
profitable OnDemand sales, this is driving continued profit growth. In the
year ahead we will be making meaningful changes to our Groceries Online app,
helping us to continue to improve the way in which our customers can shop with
us online
Playing a leading role in creating a more sustainable food system
· We're creating a new culture of collaboration and long-term partnership with
our suppliers to deliver shared value and build resilient supply chains, which
will enable us to offer good food to our customers now and in the future. Last
month we announced a ten-year partnership with Cranswick to set new standards
in pig welfare and to provide more stability for the 170 farmers in the
Sainsbury's Pork Producer Group as they invest in farms, factories and
processes to build resilience for the future. Together we plan to invest more
than £60 million to implement these new higher standards. We also aim to
offer Taste the Difference pork that meets net zero criteria by 2029 and by
Sainsbury's fresh pork by 2030 - all whilst protecting value for our
customers. This year we also launched the Sainsbury's Egg Group in
collaboration with our egg farmers and became the first retailer globally to
invest in Vet Vision AI technology to measure and enhance animal welfare on
dairy farms
· To support and inspire our customers to make healthier choices, we launched
our Healthy Choice logo on own brand products. We continue to work to make
healthier choices more affordable, with more than 75 per cent of products in
Aldi Price Match a Healthy or Better For You choice. Alongside this, we
launched our Good to Know campaign, to help our customers to navigate towards
more sustainable choices, highlighting the ways in which we are contributing
to a more sustainable future
· For the second year running we were awarded both the Marine Stewardship
Council UK Supermarket of the Year and Aquaculture Stewardship Council UK
Retailer of the Year. We also delivered leading packaging innovations moving
to vacuum pack all lamb mince and introducing pulp trays for fresh salmon and
trout, along with cardboard packaging for our fresh breaded chicken and fish
products
· We continue to help provide good food for all, raising c.£34 million for good
causes this year and redistributing more than 18 million meals to communities,
increasing the amount of surplus food redistributed by more than 30 per cent
through our partnerships with Neighbourly and Olio, which we have now rolled
out across all stores
Improving performance in the products and services that sit alongside our food
offer
· Sainsbury's general merchandise and clothing delivered higher profits on sales
which were in line with the prior year. Margins gained from the mix benefit of
stronger clothing sales and lower household electrical and toys sales as we
continue to focus ranges and reduce space allocation in some categories
o Clothing sales grew 2.9 per cent, with particularly strong growth of 12.3 per
cent in Q4. Higher full price sales participation delivered a four per cent
improvement in profitability during the year, alongside market share
gains(18). Our renewed focus on design and range in Womenswear resulted in
particularly strong sales growth of nearly five per cent and an improvement in
customer perception of our ranges. The actions we have taken to improve our
availability and expand our basics range delivered growth in essentials sales
of nearly four per cent
o Sainsbury's general merchandise sales were down 2.8 per cent, driven by space
reductions as we've implemented space reallocations into food, and softer
demand for categories such as household electricals and toys. Poor weather
impacted seasonal sales in H1, but overall sales performance improved through
the second half. We delivered a particularly good performance in our home
accessories and fragrance categories and we continue to make strong progress
in repositioning the Habitat brand, with a strong sales response to our
design-led collaborations
· Smart Charge, our ultra-rapid electric vehicle (EV) charging network, is now
established in over 75 supermarket locations with more than 600 ultra-rapid EV
charging bays. The sites are maturing rapidly, delivering double-digit revenue
growth month-on-month. Twenty-five per cent of all electric vehicles entering
our Smart Charge Sainsbury's car parks now charge with us, up from fifteen per
cent at launch. We invested £25 million in Smart Charge rollout in 2024/25,
in line with guidance. Looking ahead, we are focused on building revenue in
our top supermarkets
Loyalty everyone loves
Customers love our personalised and rewarding Nectar loyalty scheme. Nectar
Prices have transformed the way that customers experience value at
Sainsbury's, with the purple of Nectar now synonymous with value. As value
perception has improved(19), we have grown the size of our loyal, primary
customer base and this in turn benefits our Nectar360 Retail Media offering.
Fuelled by our connection to customers, Nectar360 continues to deliver
profitable growth and improved client satisfaction. We are expanding the
Nectar coalition, delivering leading data and insights to brands and agencies
that work with us and investing to scale our Digital Retail Media offer. In
the year ahead, we will further expand our personalisation capabilities in
loyalty and we are making high returning investments to accelerate the growth
of Nectar360 - further digitising our stores through our connected digital
screen network and launching a new industry-leading platform to better connect
clients to our full suite of retail media and measurement services.
Growing customer loyalty through the 'power of purple'
· Nectar Prices remain a key driver of our improved value perception(9), with
£2 billion of savings delivered to customers over the course of this year. We
have now expanded our Nectar Prices offers to more than 9,000 products and
more and more customers are using Nectar when they shop with us, with
participation now more than 85 per cent and reaching our highest ever levels
during the Christmas period(20). We're going further to showcase Nectar Prices
in store and within our store investment programme we are rolling out more
Nectar branding, particularly in the centre aisle, as well as offering greater
opportunities for brands to connect directly with customers through displays
and digitised in-store media
· More than one million customers are accessing personalised savings each week
through Your Nectar Prices, which is available on SmartShop and Online,
delivering savings of more than £60 million to customers in the last year.
Having built unique capability in this space, we will further enhance the
strength of our value offer as we work towards generating up to 500 million
personalised offers a week
· We are focused on driving greater engagement with the Nectar app and have
achieved a 60 per cent increase in app users over the last two years(21) by
enhancing digital integration and improving user experience. We are
successfully introducing more gamification to the app and reached our highest
ever engagement levels in our Count up to Christmas rewards campaign this
year, with over one million customers participating
Investing to accelerate growth in Nectar360
· We are ahead of our plan to deliver at least £100 million incremental profit
from Nectar360 over the three years to March 2027, delivering an increase of
£39 million in the first year of our plan
· Over 900 clients and media agencies now partner with Nectar360 to get the best
return on their advertising spend, recognising the benefits of our enhanced
retail media capabilities, leading data and insights and our commitment to
exemplary client service, with overall client satisfaction improving 4
percentage points year-on-year
· We are accelerating our ambition to create a scaled and connected digital
screen network in our stores. With 820 screens (in partnership with Clear
Channel) now installed, we are realising the benefits of being able to connect
with our customers digitally on the shop floor. We are diverting capital
towards this high returning investment, committing to a further 1,600 screens
to be rolled out over 2025/26 and into early 2026/27 with a cash payback on
investment of less than two years. This will enable brands to communicate
directly with customers through more than 2,500 connected digital screens in
the future
· The Nectar coalition continues to grow and we achieved a 97 per cent Nectar
partner satisfaction score. We announced exciting new partnerships in Marriott
Bonvoy, Severn Trent Water and Smart Charge and extended our partnership with
British Airways, with further new partnerships in discussion for the year
ahead. Alongside this, our marketing affiliate programme (Nectar eShops) has
grown to 800 merchants this year, doubling the number of brands available for
customers over the last 18 months and extending the offers they are able to
access through the programme
More Argos, more often
Following a slow start to the financial year and a significant reduction in
online traffic, Argos sales were behind our expectations in the first half of
the year, particularly in the first quarter and early weeks of the second
quarter. Sales strengthened into the second half as we took action to improve
online customer traffic and volume and we returned to sales growth in the
fourth quarter. Profits declined year on year in both H1 and H2, with actions
taken during the year improving the trend in the second half.
Within a general merchandise market that remains highly competitive, our focus
is on increasing customers' consideration of Argos - encouraging them to shop
with us more often and with bigger baskets. To this end, we are driving change
in our digital and commercial proposition, and we have made some good progress
strengthening the Argos offer. We have also continued to reduce the complexity
of the Argos operating model whilst still providing market-leading convenience
for customers.
Focused on extending range, increasing desirability and enhancing digital
capabilities
· We have reset our approach to trading events to deliver more impactful and
focused value activity. We ran five of our new Big Red events during the year,
delivering strong improvements in customer satisfaction scores for promotions
and value(22) and driving an increase in awareness of the premium brands
available at Argos
· We continue to strengthen our partnerships with key supply partners, growing
our share at key launch moments of the must-have new products from global
brands, particularly across Gaming and Toys. Our partnership with Lego has
expanded over the course of the year and for the first time this Christmas we
partnered to run gamified engagement activity online for the 12 days of
Christmas, attracting over 100,000 new customers to Argos
· We have taken action to improve our own labels in addition to the work over
recent years on Habitat. We will focus on five primary owned brands (Habitat,
Chad Valley, Bush, Home and McGregor), versus 11 previously. This year will
see the range relaunch of McGregor in Garden & DIY and Chad Valley in Toys
· Through our Supplier Direct Fulfilment (SDF) model we have introduced more
than 4,000 new products this year across 150 categories. This is a 43 per cent
increase year-on-year, with a total of 13,500 SDF products now available. In
the year ahead we plan to go further to extend the breadth of our range, with
plans to add an additional 10,000 SDF products in key categories such as
Household Electronics, Furniture, Computing and Gifting
· Our digital capabilities have strengthened through the year, driving more
traffic to our site as we deliver a seamless online experience for customers
with greater personalisation and improved complementary product
recommendations. As a result, more customers are shopping with us online and
more customers are making a recommended "attachment" purchase in the same
transaction, driving an increase in items per basket. We will also be
modernising the credit offer available on our website and are working closely
on a new Argos Pay proposition with NewDay, following its acquisition of the
Argos Financial Services cards portfolio. This will launch in early 2026
Improving operational efficiency and customer experience
· We continue to enhance our operating model, including rightsizing standalone
stores to improve operational efficiency and customer experience
· We are rolling out more digital collection points and investing in technology
across our convenience estate to make collections faster and easier. We are
improving the Argos app, increasing personalisation and access to promotional
activity and simplifying the collection experience available to app users
· We have made a significant improvement to our stock management processes over
the year to deliver smarter, simpler stock flow, optimising working capital
and availability across our network. With a 12 per cent reduction in Argos'
net stockholding year-on-year, we are more able to actively manage clearance
activity to prevent accumulation of stock. We have also implemented improved
stock management processes and are using data driven insights to improve
forecast accuracy on buying and ranging
Save and invest to win
We are making strong progress towards the ambition we laid out in February
2024 and we are confident in our plans to deliver £1 billion of cost savings
by March 2027. We achieved savings of around £350 million in 2024/25,
bringing total savings over the last four years to over £1.6 billion and are
well underway with a programme of high-returning activity that is already
delivering savings benefits as well as driving growth and improvements in
customer proposition. In addition, our capital investments in efficiency,
particularly in technology, will deliver cross-functional savings benefits
over the longer-term, giving us clear line of sight to achieving our target.
High returning investments in technology and automation driving efficiencies
· We are nearing completion of our three-year future front-end programme,
optimising checkouts in all our supermarkets and delivering savings of around
£70 million over the programme. On average, self-service participation has
increased to over 70 per cent of transactions compared to around 40 per cent
of transactions five years ago. While we have achieved a step up in
supermarket volumes, front-end labour costs have reduced, driven by a nine per
cent improvement in front-end productivity year-on-year
· We are making good early progress with the next phase of our front-end
transformation, aiming to drive growth in SmartShop participation for big
basket shops. We are currently in the trial phase of enabling customers to pay
for their shopping on a SmartShop handset, delivering flexibility and speed
for customers whilst reducing the physical infrastructure required. Work is
also underway to improve the functionality of SmartShop handsets by digitising
the in-store customer journey, for example enabling product finding and
personalisation of offers
· As part of our longer-term investments in technology and automation, we are
making strong progress in simplifying our general merchandise logistics
network, driving improvements in product availability and efficiency. This
will result in a transition from five depots to three network distribution
centres, delivering savings of £70 million per year once fully implemented,
with benefits starting to be realised in 2025/26
· We are rolling out video analytics technology in stores to protect colleagues
and reduce costs, whilst minimising the impact on customer experience. The
technology, which aims to reduce mis-scanned items at self-service checkouts,
has been deployed in 150 stores to date and we expect to roll out to a further
250 stores over the next financial year. Other protection technology being
implemented includes weigh-scale smart-shelves that alert colleagues to bulk
product removal and mirror monitors in areas with high risk of loss
· Our five-year strategic partnership with Microsoft utilising AI and machine
learning capabilities is already delivering good results. Key focus areas
include providing store colleagues with real-time data and insights to focus
in-store processes and using machine learning capabilities to improve
efficiencies
· Reflecting our commitment to invest in sustainable technologies, we are now
buying 100 per cent of the energy generated from eight wind farms across the
UK. Wind energy makes up over 30 per cent of our electricity sourcing, with
the remainder from other 100 per cent renewable sources
Delivering productivity benefits through end-to-end programmes
· In January, we announced a number of propositional changes in our supermarkets
in order to drive growth and availability at a reduced cost to serve,
including closing all remaining Sainsbury's Cafés, hot food, pizza and
patisserie counters and converting scratch bakeries to bake-off. These changes
are driving cross-functional benefits, increasing our fresh food selling
space, improving customer proposition and product quality alongside delivering
cost savings
· We also announced changes to management structures in our store support
centres, reducing the number of senior management roles by about 20 per cent
in a number of areas to drive faster decision making and execution whilst
reducing costs
· We have completed the main phase of migration of our food products to machine
learning forecasting and are entering our second year of using the platform.
We have delivered higher sales as a result of increased availability, improved
waste metrics and higher forecasting accuracy leading to better working
capital management
Financial Services
· Financial Services operating profit grew by 3.4 per cent in the year, driven
by lower expenses as a result of a prior year fixed asset write-off and
significant actions taken by management to reduce operational costs, partially
offset by lower income from the decision to exit core Banking and higher
funding costs. We have made good progress over the year in implementing our
plan for a phased withdrawal from core Banking services, announcing in June
2024 the sale of Sainsbury's Bank personal loan, credit card and retail
deposit portfolios to NatWest Group. We now expect this transaction to
complete in May 2025
· In September 2024 we announced the sale of the Sainsbury's Bank ATM business,
comprising around 1,370 cash machines, to NoteMachine to provide end-to-end
ATM managed services. The deal provides a shared commission income stream
· In October 2024 we announced the sale of the Argos Financial Services (AFS)
cards portfolio to NewDay Group. NewDay acquired beneficial title to the AFS
portfolio in February 2025. The AFS cards support around 20 per cent of Argos
sales and are held by around two million Argos customers. We additionally
announced that we will be partnering with NewDay to create a new Argos-branded
digital credit proposition. This will, in time, replace the current Argos
credit card propositions with a wider choice of modern, flexible and more
convenient ways to manage the cost of purchases
· Following these transactions, we will continue to benefit from financial
services income streams which have a stronger connection to our retail offer,
including commission income from insurance, travel money and ATMs. We expect
the combination of commission income from insurance, travel money and ATMs,
alongside income from the NewDay partnership, to deliver sustainable annual
profit from financial services of at least £40 million in the financial year
to February 2028
· In 2025/26 we expect to deliver Financial Services underlying operating profit
of around £10 million on a continuing basis
· We expect to return bank disposal proceeds of £250 million via special
dividend in the second half of the year, subject to regulatory approval. The
special dividend will be accompanied by a proposed share consolidation. Any
distributable bank disposal proceeds in excess of £250 million will be used
to enhance the share buyback above a core £200 million base
Like-for-like sales performance 2023/24 2024/25
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY
Like-for-like sales (exc. fuel) 9.8% 6.6% 7.4% 4.8% 2.7% 4.2% 2.8% 3.7% 3.2%
Like-for-like sales (inc. fuel) 3.9% 2.2% 5.3% 2.9% 2.4% 1.9% 0.0% 2.2% 1.5%
Total sales performance 2023/24 2024/25
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY
Sainsbury's 9.9% 7.5% 8.4% 6.5% 4.2% 5.1% 3.7% 4.1% 4.2%
Grocery 11.0% 8.9% 9.3% 7.3% 4.8% 5.3% 4.1% 3.9% 4.5%
GM (Sainsbury's) & Clothing (2.5)% (8.7)% (0.3)% (5.5)% (4.3)% 2.2% (0.1)% 6.5% 0.0%
Argos 5.1% (2.6)% (0.9)% (6.6)% (7.7)% (1.4)% (1.4)% 1.9% (2.7)%
Total Retail (exc. fuel) 9.2% 5.8% 6.5% 4.3% 2.3% 4.1% 2.7% 3.8% 3.1%
Fuel (21.4)% (17.1)% (7.2)% (7.8)% 0.4% (10.6)% (17.4)% (6.8)% (8.9)%
Total Retail (inc. fuel) 3.3% 1.5% 4.4% 2.4% 2.1% 1.9% 0.0% 2.2% 1.4%
Total sales performance (£m) 2023/24 2024/25
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY
Sainsbury's 7,707 5,650 8,395 3,809 8,029 5,940 8,706 3,964 26,639
Grocery 7,177 5,263 7,676 3,583 7,521 5,544 7,988 3,724 24,777
GM (Sainsbury's) & Clothing 530 387 719 226 508 396 718 240 1,862
Argos 1,400 1,047 1,960 647 1,292 1,033 1,933 658 4,916
Total Retail (exc. fuel) 9,107 6,697 10,355 4,456 9,321 6,973 10,639 4,622 31,555
Fuel 1,543 1,200 1,624 739 1,549 1,073 1,341 690 4,653
Total Retail (inc. fuel) 10,650 7,897 11,979 5,195 10,870 8,046 11,980 5,312 36,208
Total sales performance - 2023/24 2024/25
previously reported categorisation
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY
Total General Merchandise: 4.0% (2.6)% (0.6)% (5.6)% (7.3)% (1.7)% (1.5)% 1.9% (2.7)%
GM (Sainsbury's) (1.2)% (2.7)% 0.9% 0.4% (5.3)% (3.3)% (2.3)% 1.7% (2.8)%
GM (Argos) 5.1% (2.6)% (0.9)% (6.6)% (7.7)% (1.4)% (1.4)% 1.9% (2.7)%
Clothing (3.7)% (14.6)% (1.7)% (11.7)% (3.3)% 8.3% 2.2% 12.3% 2.9%
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. They appear in a number of places throughout this
announcement and include statements regarding our intentions, beliefs or
current expectations and those of our officers, directors and employees
concerning, amongst other things, our results of operations, financial
condition, liquidity, prospects, growth, strategies and the business we
operate. 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 (BST). This will
be available to view on our website at the following link:
https://sainsburys-preliminary-results-2024-25.open-exchange.net/
(https://urldefense.com/v3/__https:/sainsburys-preliminary-results-2024-25.open-exchange.net/__;!!BQ_wX6TuWITc6hG5HA!UMVl2AIGuo9yCLbcBlHgJ559ff00cu8O7z4W4yBHqtqcnSEIasO2aC-a4rAnN3RQP4AsmGn1xvRTKo1fYhFoAshGj3imBw$)
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 issue its 2025/26 First Quarter Trading Statement at 07:00
(BST) on 1 July 2025.
Enquiries
Investor Relations Media
James Collins Rebecca Reilly
+44 (0) 7801 813 074 +44 (0) 20 7695 7295
(1) Kantar Panel, Total FMCG (excl. Kiosk and Tobacco), Grocery volume market
share gains YoY - From FY22/23 to FY24/25, 52 weeks to 2 March 2025
(2) Kantar Panel, Total FMCG (excluding Kiosk and Tobacco), Primary shoppers
number growth FY 20/21 to FY 24/25, 52 weeks to 23 February 2025
(3) Kantar Panel, Total FMCG (excl. Kiosk and Tobacco), Grocery volume growth
by quarter, FY23/24 and FY24/25, 52 weeks to 2 March 2025
(4) Kantar Panel , Grocery universe, Grocery volume market share gains YoY -
from FY13/14 to FY 24/25, 52 weeks to 2 March 2025
(5) Kantar Panel, Total FMCG (excl. Kiosk & Tobacco), Primary shopper
number growth FY24/25 YoY, 52w to 23 February 2025
(6) Kantar Panel, Total FMCG (excl. Kiosk and Tobacco), Primary and Secondary
shoppers churn analysis, FY24/25, 52 weeks to 2 March 2025
(7) Kantar Panel, Total FMCG (excl. Kiosk and Tobacco), Volume Share of Market
by Mission - Main Shop, YoY share % change (% pts), 52 weeks to 2 March 2025
(8) Value Reality, March 2025 vs November 2020; Acuity, internal modelling
(9) YouGov Brand Index - Supermarket Value for Money Perception metric, YoY
%pt improvement, Q4 24/25
(10) Kantar Panel, Total FMCG (excl. Kiosk & Tobacco), proportion of
baskets containing Premium Own Label tier, 52 weeks to 2 March 2025
(11) NiQ EPOS data, Total FMCG excluding Kiosk & Tobacco, JS units growth
YoY% difference to Total Market growth YoY% for key events week FY24/25 versus
last year events week FY23/24
(12) Kantar Panel, Total FMCG (excl. Kiosk and Tobacco), Premium Own Label
tier, YoY % value growth, 52 weeks to 2 March 2025
(13) CSAT Supermarket Competitor Benchmarking data - Availability of Products-
FY24/25 vs FY20/21
(14) CSAT Supermarket Competitor Benchmarking data - Overall Supermarket
Satisfaction
(15) Nielsen EPOS, Convenience value market share change YoY (% pts). 52 weeks
to 1 March 2025
(16) CSAT Convenience Competitor Benchmarking Data - Value for Money - Q4
24/25 vs Q3 24/25
(17) CSAT Groceries Online Competitor Benchmarking Data - Overall
Satisfaction, Appealing Promotions, Availability of Items - FY24/25 vs FY23/24
(18)Kantar Panel, Total Clothing, Footwear and Accessories. Retailer share of
volume - YoY % share gains. 52 weeks to 3 March 2025
(19) Brand Tracker data, Nectar Value Perception, Sainsbury's shoppers only,
'Help save everyday' measure
(20) Nectar participation measure across Supermarkets and Groceries Online
(21) Definition: 8 Week Digitally Active Users
(22) Argos CSAT survey - Appealing Promotions, Value for Money - FY24/25 vs
FY23/24
Financial review of the year results for the 52 weeks to 1 March 2025
A number of Alternative Performance Measures (APMs) have been adopted by the
Directors to provide additional information on the underlying performance of
the Group. These measures are intended to supplement, rather than replace the
measures provided under IFRS. Underlying performance within this financial
review refers to the Group's performance on a continuing operations and
discontinued operations basis before non-underlying items, unless where
otherwise stated. Underlying performance measures are reconciled to their IFRS
equivalents on the face of the income statement with non-underlying items set
out in more detail in note 3 to the financial statements. Other APMs are
defined and reconciled to the nearest IFRS measures in notes A1 to A4.
The comparative results have been re-presented, as Core Banking, ATM
operations, Argos Financial Services cards and mortgages have been classified
as discontinued operations, following the respective agreement to sell and
announced sale of related operations as part of the strategic review of
Financial Services. Further details can be found in note 9.
Summary income statement 52 weeks to 1 March 2025 52 weeks to 2 March 2024 Change
£m £m %
Underlying Group sales (excluding VAT) 33,142 32,721 1.3
Continuing 32,812 32,238 1.8
Discontinued 330 483 (31.7)
Underlying operating profit
Retail 1,036 966 7.2
Financial Services 30 29 3.4
Continuing (7) (18) 61.1
Discontinued 37 47 (21.3)
Total underlying operating profit 1,066 995 7.1
Underlying net finance costs (305) (294) (3.7)
Underlying profit before tax 761 701 8.6
Items excluded from underlying results (377) (424) 11.1
Continuing (103) (165) 37.6
Discontinued (274) (259) (5.8)
Profit before tax 384 277 38.6
Income tax expense (142) (140) (1.4)
Continuing (201) (181) (11.0)
Discontinued 59 41 43.9
Profit for the financial period 242 137 76.6
Continuing 420 308 36.4
Discontinued (178) (171) (4.1)
Underlying basic earnings per share 23.1p 22.1p 4.5
Basic earnings per share 10.4p 5.9p 76.3
Interim dividend per share 3.9p 3.9p -
Final dividend per share 9.7p 9.2p 5.4
Total dividend per share 13.6p 13.1p 3.8
In the 52 weeks to 1 March 2025, the Group generated total profit before tax
of £384 million (2023/24: £277 million) and a total underlying profit before
tax of £761 million (2023/24: £701 million).
Profit growth was driven primarily by the performance of the food business,
reflecting a second year of strong volume growth and market outperformance in
every quarter. Higher food profits more than offset the impact of a
challenging general merchandise market on Argos, where both sales and profit
declined. Our ongoing cost savings programme helped reduce the impact of
inflationary headwinds and allowed us to lead the market in announcing an
above inflation pay increase for colleagues.
Cash generation remained strong, supporting higher capital investment, with
retail free cash flow of £531 million, most of which was returned to
shareholders through dividend payments of £308 million and a share buyback of
£200 million.
Group sales
Group sales (including VAT) increased by 1.0 per cent year-on-year, with a 3.1
per cent increase in retail sales (including VAT, excluding fuel) offset by an
8.9 per cent decrease in fuel sales (including VAT).
Total sales (including VAT) performance by category 52 weeks to 1 March 2025 52 weeks to 2 March 2024 Change
£m £m %
Sainsbury's 26,639 25,561 4.2
Grocery 24,777 23,699 4.5
General Merchandise (Sainsbury's) and Clothing 1,862 1,862 -
Argos 4,916 5,054 (2.7)
Retail (exc. fuel) 31,555 30,615 3.1
Fuel sales 4,653 5,106 (8.9)
Retail (inc. fuel) 36,208 35,721 1.4
Financial Services 512 637 (19.6)
Continuing operations 182 154 18.2
Discontinued operations 330 483 (31.7)
Group sales 36,720 36,358 1.0
Continuing operations 36,390 35,875 1.4
Discontinued operations 330 483 (31.7)
Retail like-for-like sales performance 52 weeks to 1 March 2025 52 weeks to 2 March 2024
Like-for-like sales (exc. fuel) 3.2% 7.5%
Like-for-like sales (inc. fuel) 1.5% 3.8%
Grocery sales increased by 4.5 per cent, reflecting strong volume growth ahead
of the market. Customers continue to respond positively to the improvements we
have made to the grocery customer proposition in recent years, including the
introduction of Nectar Prices, and we are attracting and retaining more big
basket primary customers, who do the majority of their shopping with
Sainsbury's. General merchandise and clothing sales at Sainsbury's were in
line with last year, with higher clothing sales reflecting range and
availability improvements and offsetting lower general merchandise sales.
Argos sales reduced by 2.7 per cent, impacted by a subdued and highly
competitive general merchandise market. In the first half of the financial
year, a significant reduction in online traffic and cooler and wetter summer
weather meant Argos sales were behind expectations. Whilst remaining highly
promotionally driven, sales strengthened in the second half as the online
traffic trend improved and Argos returned to year-on-year growth in the fourth
quarter.
Fuel sales decreased by 8.9 per cent as a consequence of both reduced demand
and lower forecourt prices driven by falling commodity prices in a highly
competitive market.
Total sales (including VAT) performance by channel 52 weeks to 1 March 2025 52 weeks to 2 March 2024
% %
Total sales fulfilled by supermarket stores 4.0 10.3
Supermarkets (inc. Argos stores in Sainsbury's) 3.5 11.0
Groceries Online 7.0 5.5
Convenience 3.7 10.3
Sales in our supermarkets were up 4 per cent and we have made excellent
progress in the execution of our 'More for More' strategy, with around 90,000
sq ft of space rebalanced into food during the year. In addition, throughout
the second half we began implementing changes across several of our food
service propositions; moving to a more efficient model, driving improved
availability and choice for customers, whilst simultaneously unlocking more
space to reinvest into the wider food hall.
Groceries online sales grew by 7 per cent. This was ahead of the market and
driven primarily by an increase in the number of orders per week. Convenience
sales also grew ahead of the market and benefited from a large-scale layout
alteration across the estate - aimed at ensuring each store has a product
range specifically designed to meet its customers' needs.
Retail underlying operating profit
Retail underlying operating profit Note (a)) 52 weeks to 1 March 2025 52 weeks to 2 March 2024 Change
Retail underlying operating profit (£m) A1.2 a) 1,036 966 7.2%
Retail underlying operating margin (%) A1.2 a) 3.17 3.01 16 bps
Retail underlying EBITDA (£m) A1.2 d) 2,192 2,078 5.5%
Retail underlying EBITDA margin (%) A1.2 d) 6.72 6.48 24 bps
a) Note references for reconciliations refer to the Alternative Performance
Measures
Retail underlying operating profit increased by 7.2 per cent to £1,036
million (2023/24: £966 million) and retail underlying operating margin
increased by 16 basis points year-on-year to 3.17 per cent (2023/24: 3.01 per
cent). This represents the benefit of sales leverage across our cost base,
driven by volume growth in Sainsbury's and cost savings helping offset
operating cost inflation, particularly in wages.
Retail underlying EBITDA increased to £2,192 million (2023/24: £2,078
million), with retail underlying EBITDA margin improving 24 basis points to
6.72 per cent (2023/24: 6.48 per cent).
In 2025/26, the Group expects a retail underlying depreciation and
amortisation charge of around £1.2 billion (2024/25: £1.2 billion),
including £0.5 billion right of use asset depreciation.
The Group expects to deliver retail underlying operating profit of around £1
billion in 2025/2026.
Space
During 2024/25, Sainsbury's opened four new supermarkets and closed three, and
opened 25 new convenience stores, closing three.
We opened 16 new Argos stores in Sainsbury's and closed ten standalone Argos
stores. As at 1 March 2025, Argos had 664 stores, including 461 stores in
Sainsbury's, and a total of 1,107 points of presence.
Store numbers and retailing space As at 2 March 2024 Remeasurement New stores Disposals / Closures Reclassifications As at 1 March 2025
(a)) (b))
Supermarkets 597 - 4 (3) 1 599
Supermarkets area '000 sq ft 20,801 103 93 (77) 10 20,930
Convenience 834 - 25 (3) (1) 855
Convenience area '000 sq ft 2,016 1 61 (14) (10) 2,054
Sainsbury's total store numbers 1,431 - 29 (6) - 1,454
Argos stores 213 - - (10) - 203
Argos stores in Sainsbury's 446 - 16 (1) - 461
Argos total store numbers 659 - 16 (11) - 664
Argos collection points 456 - 25 (38) - 443
a) Remeasures and smaller projects which took place across a large number of
stores
b) Desborough Harborough was reclassified as a supermarket, previously being a
convenience
During the year we acquired 12 leasehold stores from Homebase and an
additional two from Co-op, all of which will be converted to Sainsbury's
supermarkets during 2025/26 and 2026/27, alongside our existing organic
supermarket growth pipeline. These are not included in the table above as they
are not yet trading.
In total for 2025/26, we plan to open 15 new supermarkets and 25 convenience
stores and we anticipate a modest number of supermarket and convenience store
closures. We expect a net space impact on retail sales growth of around 0.5
per cent in 2025/26.
Financial Services
During the year we announced the sale of our Core Banking services, ATM
business and the Argos Financial Services cards portfolio(a)). These, along
with the previously disposed mortgage operations, have been classified as
discontinued operations as they form part of the single co-ordinated plan to
move to a distributed financial services model as announced in January 2024.
Financial Services results
12 months to 28 February 2025 2025 2024 Change
%
Underlying revenue (£m) 512 637 (19.6)
Continuing 182 154 18.2
Discontinued 330 483 (31.7)
Underlying operating profit (£m) 30 29 3.4
Continuing (7) (18) 61.1
Discontinued 37 47 (21.3)
Total capital ratio (%) 25.3 19.4 590bps
a) The Core Banking Business comprising of personal loans, credit cards and
retail deposit portfolios are subject to a sale agreement with NatWest Group
which is expected to be completed in the first half of 2025/26. The Argos
Financial Services card portfolio was sold to NewDay Group Holdings on 28
February 2025. ATM operations will be fully migrated to NoteMachine by May
2025.
Financial Services underlying revenue declined 19.6 per cent driven primarily
as a result of the accounting impact of the announced sales of Core Banking
portfolios. Certain elements of interest income adjustments for those
discontinued operations previously recognised as revenue have now been
reclassified as a fair value gain within operating costs. These adjustments
have no impact on the overall reported operating profit.
On a continuing basis, revenue has increased 18.2 per cent driven primarily by
improved returns on treasury assets that are not deemed directly attributable
to the discontinued operations, and strong performance across the remaining
commission products.
Underlying operating profit of £30 million increased by £1 million (2023/24:
£29 million). During the year, performance benefitted both from a reduced
depreciation charge following a fixed asset write off in the prior year and
significant actions taken by management to reduce operational costs, with
headcount lower by 19 per cent since February 2024. This was partly offset by
lower income as balances reduced following the decision to exit Core Banking
and the cessation of new lending activity.
Financial Services remains well capitalised, with a total capital ratio of
25.3 per cent, an increase of 590 basis points driven by the sale of Argos
Financial Services and the rundown of the credit cards and personal loans
books.
Underlying operating losses from continuing operations reduced by £11 million
in the 12 months to 28 February 2025, driven by strong performances in travel
money and pet insurance.
Underlying profit on discontinued operations includes costs wholly associated
with assets which are to be sold, namely, the Argos Financial Services cards
portfolio, the Core Banking portfolios and ATMs, together with a proportion of
central and cross-product costs. The remainder of our central costs have been
allocated to continuing operations, albeit we expect these costs to reduce as
we right size our support functions in line with the transition to a
distributed model.
In 2025/26, the Group expects Financial Services underlying operating profit
on a continuing basis to be around £10 million.
Underlying net finance costs
Underlying net finance costs 52 weeks to 1 March 2025 52 weeks to 2 March 2024 Change
£m £m %
Non-lease interest costs (76) (71) (7.0)
Non-lease interest income 29 28 3.6
Finance costs on lease liabilities (258) (251) (2.8)
Total underlying net finance costs (305) (294) (3.7)
Underlying net finance costs increased by £11 million to £305 million
(2023/24: £294 million) driven by non-lease interest. The increase in net
non-lease interest was due to the £575 million term loan being fully drawn
for the vast majority of 2024/25, whereas in 2023/24 £200 million was drawn
in March and the remaining £375 million in July. Net financing costs on lease
liabilities increased to £258 million (2023/24: £251 million), due primarily
to the increased number of equipment leases added in the year.
In January, the Group issued £550 million of fixed rate bonds split into two
tranches; a £250 million five-year tranche and a £300 million ten-year
tranche.
The Group expects underlying net finance costs in 2025/26 of between £300
million and £310 million, including around £255 million lease interest
costs.
Items excluded from underlying results
To provide shareholders with insight into the underlying performance of the
business, items recognised in reported profit before tax which, by virtue of
their size and/or nature, do not reflect the Group's underlying performance
are excluded from the Group's underlying results and shown in the table below.
Items excluded from underlying results Note 52 weeks to 1 March 2025 52 weeks to 2 March 2024
£m £m
Continuing operations:
Retail restructuring programmes (128) (95)
Impairment of non-financial assets (16) -
IAS 19 pension income 28 44
Property, finance and acquisition adjustments 30 (86)
Financial Services phased withdrawal (17) (28)
Items excluded from underlying results - continuing operations 3 (103) (165)
Discontinued operations:
Financial Services loss on disposal (a)) 9.4 (141) (14)
Financial Services phased withdrawal (b)) 9.3 (133) (245)
Items excluded from underlying results - discontinued operations (274) (259)
Total items excluded from underlying results pre-tax (377) (424)
a) Post-tax loss on disposal of £106 million post recognition of £35 million
income tax credit (2024: £11 million post recognition of £3 million income
tax credit).
b) Post-tax phased withdrawal costs directly attributable to the disposal group
of £103 million post recognition of £30 million income tax credit (2024:
£196 million post recognition of £49 million income tax credit).
Continuing operations
Retail restructuring programme costs of £128 million (2023/24: £95 million)
were recognised in the year. Of this, £66 million relates to the multi-year
programme announced in November 2020. Cash costs in the period relating to
this programme were £40 million (2023/24: £67 million). Most of the 2020
programme has now completed, with costs incurred to date of £907 million, and
cash costs to date of £310 million.
Separately, as part of our Next Level Sainsbury's strategy implementation
announced in February 2024, we have commenced a three-year restructuring
programme which will update our central management structures to support
faster decision-making and drive performance at both Sainsbury's and Argos,
creating fewer, bigger roles with clearer accountabilities. As part of the
strategy, it was also announced in the current year that we will be consulting
on the closure of food counters, cafés, and the conversion of remaining
scratch bakeries. In the current year, these initiatives resulted in costs of
£62 million, with cash costs of £31 million. We expect this programme to
incur total cash costs of around £150 million.
Overall retail restructuring programmes cash costs of £71 million were lower
than the guidance of £100 million due to a change in phasing of the cash
outflows in relation to the newly announced multi-year programmes. The Group
expects to incur non-underlying cash costs relating to retail restructuring
programmes of around £100 million in 2025/26.
The Group recognised £16 million impairment on non-trading sites, reflecting
rent reviews.
IAS 19 pension income decreased to £28 million (2023/24: £44 million). The
lower pension income in the current period was primarily driven by the impact
of the lower opening surplus at the beginning of the financial year compared
to the prior year.
Property, finance and acquisition adjustments of £30 million income (2023/24:
£86 million expense) include £57 million of gains relating to property
related transactions, predominantly driven by the completion of the Hendon
mixed use development site, offset by £17 million of acquisition adjustment
costs and £12 million of lease interest costs. The expense in the prior year
included £15 million related to property transactions, a £46 million loss on
energy derivatives caused by decreases in electricity forward prices in the
period (compared to a £2 million gain on energy derivatives in 2024/25), £15
million of acquisition adjustment costs and £10 million of lease interest
costs.
Costs associated with the phased withdrawal from Financial Services comprise
£8 million of onerous contracts, £8 million of employee costs and £1
million of consultancy costs (2023/24: £22 million of fixed asset
impairments, £3 million of consultancy costs and £3 million of employee
costs).
Discontinued operations
The loss of £141 million on disposal relates to the sale of Financial
Services product portfolios. It is comprised of the difference between the
carrying amount of the net assets to be disposed and the agreed selling price
and disposal costs including those required to migrate the portfolios to the
buyers. During 2023/24, the Group disposed of its mortgage portfolio for
proceeds of £446 million, which resulted in a loss on disposal of £14
million.
Costs of £133 million associated with the withdrawal primarily relate to
onerous contracts, loss on derivatives no longer classified in an effective
hedge relationship and employee costs. In 2023/24, costs of £245 million
associated with the withdrawal mainly comprised impairment of non-financial
assets, additional allowances arising from a reassessment of the effective
interest rate applied to the amortised cost of financial assets, onerous
contracts relating to long-dated computer software contracts and impairment of
the remaining goodwill held in the Bank.
Taxation
The income tax expense was £142 million (2023/24: £140 million). The tax
charge on continuing operations was £201 million (2023/2024: £181 million).
The underlying tax rate on continuing operations was 29.8 per cent (2023/24:
26.7 per cent) and the effective tax rate on continuing operations was 32.4
per cent (2023/24: 37.1 per cent).
The effective tax rate on continuing operations of 32.4 per cent for the year
was higher than the underlying rate because of a change in estimate with
regards to the treatment of dilapidations. It was significantly lower than the
prior year which included the release of a deferred tax asset on capital
losses as a result of the Highbury and Dragon property transaction in that
year.
The Group expects an underlying tax rate in 2025/26 of around 30 per cent.
Earnings per share
Statutory basic EPS increased to 10.4 pence (2023/24: 5.9 pence) due to an
increase in statutory earnings. Statutory diluted EPS also increased to 10.2
pence (2023/24: 5.7 pence).
Underlying basic EPS increased to 23.1 pence (2023/24: 22.1 pence), due to an
increase in underlying earnings. Underlying diluted EPS increased to 22.7
pence (2023/24: 21.6 pence).
Dividends
The Board has recommended a final dividend of 9.7 pence per share (2023/24:
9.2 pence). This will be paid on 11 July 2025 to shareholders on the Register
of Members at the close of business on 6 June 2025. In line with the Group's
new policy to pay a progressive dividend, the total full-year dividend was
13.6 pence per share, an increase of 3.8 per cent (2023/24: 13.1 pence).
Sainsbury's has a Dividend Reinvestment Plan (DRIP). This allows shareholders
to reinvest their cash dividends in our shares. The last date that
shareholders can elect for the DRIP is 20 June 2025.
For the financial year 2025/26, as per our capital allocation policy, we are
committed to a progressive dividend policy. Reflecting the strength of our
balance sheet, we will buy back at least £200 million of shares in 2025/26.
We expect to return bank disposal proceeds of £250 million via special
dividend in the second half of the year. The special dividend will be
accompanied by a proposed share consolidation. We will continue to review the
level of cash return to shareholders through buybacks on an annual basis.
Net debt and retail cash flows
Summary retail cash flow statement Note (a)) 52 weeks to 52 weeks to
1 March 2025 2 March 2024
£m £m
Retail underlying operating profit 4 1,036 966
Adjustments for:
Retail underlying depreciation and amortisation 1,156 1,112
Share-based payments and other 67 78
Adjusted retail underlying operating cash flow before changes in working 2,259 2,156
capital
Decrease in underlying working capital 98 262
Retail non-underlying operating cash flows (excluding pensions) (71) (72)
Pension cash contributions (45) (44)
Retail cash generated from operations 2,241 2,302
Interest paid (347) (323)
Corporation tax paid (89) (58)
Retail net cash generated from operating activities 1,805 1,921
Cash capital expenditure (825) (814)
Repayments of lease liabilities (487) (505)
Initial direct costs on right-of-use assets (34) (6)
Proceeds from disposal of property, plant and equipment 45 16
Interest income 27 27
Retail free cash flow 531 639
Dividends paid on ordinary shares (308) (306)
Purchase of own shares - share buyback (200) -
Net (repayment)/drawdown of borrowings (79) 534
Net consideration paid for Highbury and Dragon property transaction - (670)
Other share-related transactions (43) (3)
Financial Services strategic review (52) -
Net (decrease)/increase in cash and cash equivalents (151) 194
Decrease/(increase) in debt 566 (29)
Highbury and Dragon non-cash lease movements - 1,042
Other non-cash and net interest movements ( b)) (619) (417)
Movement in net debt 18 (204) 790
Opening net debt 18 (5,554) (6,344)
Closing net debt 18 (5,758) (5,554)
Of which:
Lease liabilities 18 (5,494) (5,354)
Net debt excluding lease liabilities (264) (200)
a) Note references relate to Alternative Performance Measures in notes A2.1 and
A2.2
b) Other non-cash movements include new leases and lease modifications and fair
value movements on derivatives used for hedging long-term borrowings
Adjusted retail underlying operating cash flow before changes in working
capital increased by £103 million year-on-year to £2,259 million (2023/24:
£2,156 million), primarily due to an increase in retail underlying operating
profit.
Cash inflow from reduced working capital of £98 million (2023/24: £262
million working capital reduction), was driven by an increase in payables
while maintaining a flat inventory position. Year-on-year working capital
generation reduced by £164 million, primarily due to timing within payables
and receivables.
Retail non-underlying operating cash flows of £71 million relate to retail
restructuring programme costs, of which £40 million relates to the multi-year
programme announced in November 2020 and £31 million relates to the
implementation of the Next Level Sainsbury's strategy.
Pension cash contributions of £45 million remained consistent with the prior
year as no funding level events occurred. The Group expects pension cash
contributions in 2025/26 to be £26 million.
We paid corporation tax of £89 million in the year (2023/24: £58 million).
The £31 million increase in tax payable year on year is predominantly
attributable to an increase in retail profitability and the annualisation of
tax rate changes.
Cash capital expenditure was £825 million (2023/24: £814 million). The
year-on-year increase was primarily driven by increased investment in
technology, supply chain and logistics. Strategic investment in electric
vehicles (EV) charging infrastructure was £25 million (2023/24: £63
million). The Group expects core retail cash capital expenditure (excluding
Financial Services) in 2025/26 to be between £800 million to £850 million.
Initial direct costs of right-of-use assets were £34 million (2023/24: £6
million), relating to costs incurred on the acquisition of Homebase stores.
Proceeds from the disposal of property, plant and equipment were £45 million
(2023/24: £16 million) of which £22 million was received in relation to the
Hendon mixed use development site completion in the year. The remaining
proceeds resulted from disposals in line with our property strategy.
Retail free cash flow declined by £108 million year-on-year to £531 million
(2023/24: £639 million), driven by the reduction in working capital inflow
and higher capital expenditure, but remains in line with our commitment to
generate at least £1.6 billion of retail free cash flow over three years to
2026/27. In 2025/26 the Group expects to generate retail free cash flow of
more than £500 million.
Dividends of £308 million were paid in the year, covered 1.7 times by free
cash flow (2023/24: 2.1 times).
On 26 April 2024 the Group announced the commencement of a £200 million share
buyback programme, which was completed on 17 December 2024.
Net drawdown of borrowings includes the repayment in full of the £575 million
unsecured term loan facility drawn down in 2023/24 to part fund the Highbury
and Dragon property transaction. The Group received £544 million net of fees
from the issuance of Investment Grade Corporate Bonds, split into two
tranches, a £250 million tranche maturing in June 2030 and a £300 million
tranche maturing in January 2035.
As at 1 March 2025, net debt was £5,758 million (2 March 2024: £5,554
million), an increase of £204 million. Excluding the impact of lease
liabilities, non-lease net debt increased by £64 million in the year, to
£264 million (2 March 2024: £200 million), impacted by increased costs in
relation to the Financial Services strategic review and costs incurred in
relation to other share-related transactions.
Net debt includes lease liabilities of £5,494 million (2 March 2024: £5,354
million). Lease liabilities increased by £140 million, of which £27 million
related to the acquisition of Homebase stores.
For the financial year ending 1 March 2025, the definition of retail free cash
flow has changed (as stated on page 52 of the 2024 Annual Report and Financial
Statements). This now excludes capital injections to, dividends from, and any
other exceptional cash movements with or on behalf of Sainsbury's Bank and its
subsidiaries. As at 1 March 2025, there have been £52 million of retail
exceptional costs on behalf of Sainsbury's Bank relating to Core Banking
withdrawal which have been excluded from retail free cash flow.
Financial Ratios
Key financial ratios (a)) As at As at
1March 2 March
2025 2024
Return on capital employed 9.0% 8.3%
Net debt to EBITDA 2.6x 2.6x
Fixed charge cover 2.8x 2.7x
a) Reconciliations are set out in notes A4.1, A3.2 and A4.2 of the APMs
Return on capital employed (ROCE) improved 70 basis points, primarily driven
by improved underlying retail operating profit.
Sainsbury's continues to target leverage of 3.0x - 2.4x to deliver a solid
investment grade balance sheet. Net debt to EBITDA remains stable within the
targeted leverage range. Fixed charge cover is stable.
Defined benefit pensions
At 1 March 2025, the net defined benefit surplus under IAS 19 for the Group
was £731 million (excluding deferred tax). This marks an increase of £41
million from the prior year-end date of 2 March 2024. The primary driver of
this increase was changes in financial assumptions, specifically an increase
in the discount rate from 5.00 per cent per annum to 5.45 per cent per annum,
which led to a decrease in scheme liabilities. This decrease in scheme
liabilities was broadly offset by a reduction in the value of matching assets
used to hedge against movements in gilt yields and inflation.
An updated triennial funding valuation of the Scheme is currently being
carried out with an effective date of 30 September 2024.
For 2025/26, the total defined benefit pension scheme contributions are
expected to be £26 million (2024/25: £45 million).
Retirement benefit obligations Sainsbury's Argos Group Group
as at as at as at as at
1 March 2025 1 March 2025 1 March 2025 2 March 2024
£m £m £m £m
Present value of funded obligations (4,820) (755) (5,575) (5,988)
Fair value of plan assets 5,418 911 6,329 6,702
Pension surplus 598 156 754 714
Present value of unfunded obligations (13) (10) (23) (24)
Retirement benefit surplus 585 146 731 690
Deferred income tax liability (179) (39) (218) (244)
Net retirement benefit surplus 406 107 513 446
Consolidated income statement
52 weeks to 1 March 2025 52 weeks to 2 March 2024
(restated*)
Underlying items Non-underlying items Total Underlying items Non-underlying items Total
(Note 3)
(Note 3)
Note £m £m £m £m £m £m
Continuing operations
Revenue 4 32,812 - 32,812 32,238 - 32,238
Cost of sales (30,513) (78) (30,591) (30,009) (139) (30,148)
Gross profit/(loss) 2,299 (78) 2,221 2,229 (139) 2,090
Administrative expenses (1,325) (100) (1,425) (1,333) (71) (1,404)
Other income 55 53 108 52 6 58
Operating profit/(loss) 1,029 (125) 904 948 (204) 744
Finance income 6 31 36 67 30 51 81
Finance costs 6 (336) (14) (350) (324) (12) (336)
Profit/(loss) before tax - continuing operations 724 (103) 621 654 (165) 489
Income tax (expense)/credit 7 (216) 15 (201) (174) (7) (181)
Profit/(loss) after tax - continuing operations 508 (88) 420 480 (172) 308
Profit/(loss) after tax - discontinued operations 9 31 (209) (178) 36 (207) (171)
Profit/(loss) for the financial period 539 (297) 242 516 (379) 137
Total earnings per share 8 pence pence pence pence
Basic - total 23.1 10.4 22.1 5.9
Diluted - total 22.7 10.2 21.6 5.7
Earnings per share - from continuing operations
Basic - continuing 18.0 13.2
Diluted - continuing 17.7 12.9
*Comparative periods have been re-presented to separately disclose
discontinued operations. Refer to note 9 for further details.
Consolidated statement of comprehensive income/(loss)
52 weeks to 1 March 2025 52 weeks to 2 March 2024
(restated*)
Note £m £m
Profit for the financial year 242 137
Items that will not be subsequently reclassified to the income statement
Remeasurement on defined benefit pension schemes 20 (33) (389)
Movements on financial assets at fair value through other comprehensive income - 1
Cash flow hedges fair value movements - inventory hedges 1 (67)
Current tax relating to items not reclassified (1) 10
Deferred tax relating to items not reclassified 9 177
(24) (268)
Items that may be subsequently reclassified to the income statement
Currency translation differences - (3)
Movements on financial assets at fair value through other comprehensive income 1 -
Cash flow hedges fair value movements - non-inventory hedges 13 (82)
Items reclassified from cash flow hedge reserve 2 4
Deferred tax on items that may be reclassified (4) 17
12 (64)
Total other comprehensive loss for the year (net of tax) (12) (332)
Total comprehensive income / (loss) for the year 230 (195)
Continuing operations 408 (24)
Discontinued operations 9 (178) (171)
Total comprehensive income / (loss) for the year 230 (195)
*Comparative periods have been re-presented to separately disclose
discontinued operations. Refer to note 9 for further details.
Consolidated balance sheet
1 March 2025 2 March 2024
Note £m £m
Non-current assets
Property, plant and equipment 11 9,358 9,282
Right-of-use assets 12 4,455 4,296
Intangible assets 13 807 806
Investments in joint ventures and associates 2 2
Other financial assets 769 761
Trade and other receivables 42 108
Amounts due from Financial Services customers and other banks - 1,467
Derivative financial assets 35 68
Net retirement benefit surplus 20 731 690
16,199 17,480
Current assets
Inventories 1,946 1,927
Trade and other receivables 572 582
Amounts due from Financial Services customers and other banks - 3,050
Other financial assets 612 17
Derivative financial assets 15 8
Cash and cash equivalents 17 2,777 1,987
5,922 7,571
Assets of disposal group and non-current assets held for sale 15 2,527 10
8,449 7,581
Total assets 24,648 25,061
Current liabilities
Trade and other payables (5,278) (5,091)
Amounts due to Financial Services customers and other deposits (1,955) (5,515)
Borrowings 19 (72) (65)
Lease liabilities 12 (590) (515)
Derivative financial liabilities (15) (28)
Taxes payable (141) (125)
Provisions 16 (230) (113)
(8,281) (11,452)
Liabilities of disposal group held for sale 15 (3,136) -
(11,417) (11,452)
Net current liabilities (2,968) (3,871)
Non-current liabilities
Trade and other payables (24) (11)
Amounts due to Financial Services customers and other deposits (13) (206)
Borrowings 19 (1,042) (1,130)
Lease liabilities 12 (4,904) (4,839)
Derivative financial liabilities (11) (59)
Deferred income tax liability (429) (329)
Provisions 16 (157) (167)
(6,580) (6,741)
Total liabilities (17,997) (18,193)
Net assets 6,651 6,868
Equity
Called up share capital 669 678
Share premium 1,448 1,430
Merger reserve 173 568
Capital redemption and other reserves (54) 955
Retained earnings 4,415 3,237
Total equity shareholders' funds 6,651 6,868
Consolidated statement of changes in equity
Called up share capital Share premium account Merger reserve Capital redemption and other reserves Retained earnings Total equity
Note £m £m £m £m £m £m
At 3 March 2024 678 1,430 568 955 3,237 6,868
Profit for the financial year - - - - 242 242
Other comprehensive income / (loss) - - - 17 (33) (16)
Tax relating to other comprehensive income / (loss) - - - (4) 8 4
Total comprehensive income - - - 13 217 230
Cash flow hedges losses transferred to inventory - - - 18 - 18
Transactions with owners:
Transfer between reserves (a), b), c)) - - (395) (1,035) 1,430 -
Dividends 10 - - - - (308) (308)
Share-based payment - - - - 80 80
Purchase of own shares for share schemes - - - (63) - (63)
Allotted in respect of share schemes 12 18 - 37 (44) 23
Purchase of own shares for cancellation (d)) - - - (200) - (200)
Cancellation of own shares (d)) (21) - - 221 (200) -
Tax on items charged to equity - - - - 3 3
At 1 March 2025 669 1,448 173 (54) 4,415 6,651
Called up share capital Share premium account Merger reserve Capital redemption and other reserves Retained earnings Total Equity
Note £m £m £m £m £m £m
At 5 March 2023 672 1,418 568 954 3,641 7,253
Profit for the period - - - - 137 137
Other comprehensive loss - - - (147) (389) (536)
Tax relating to other comprehensive loss - - - 99 105 204
Total comprehensive loss - - - (48) (147) (195)
Cash flow hedges losses transferred to inventory - - - 32 - 32
Transactions with owners:
Dividends 10 - - - - (306) (306)
Share-based payment - - - - 87 87
Purchase of own shares for share schemes - - - (18) - (18)
Allotted in respect of share schemes 6 12 - 35 (38) 15
At 2 March 2024 678 1,430 568 955 3,237 6,868
a) The capital redemption reserve as at 3 March 2024 amounted to £680 million.
This balance arose through a return of share capital resulting in the return
and cancellation of shares, by way of a B share scheme, approved at an
Extraordinary General Meeting on 12 July 2004. The final redemption date for B
shares was 18 July 2007 with all transactions completed in 2007. Following
approval by the High Court registered on 31 July 2024, this £680 million was
reclassified as available for distribution to shareholders in accordance with
ICAEW Technical Release 02/17BL section 2.8A and as a result was transferred
to retained earnings.
b) In the prior period, the Group derecognised its financial asset relating to
its beneficial interest in a commercial property investment pool. On
derecognition, the cumulative gain or loss previously recognised in the
financial asset reserve did not result in a profit or loss in the income
statement, as gains or losses on equity instruments are never recycled to the
income statement. Following this, during the current period, £355 million was
transferred from financial asset reserves to retained earnings. This amount
represented the cumulative gains and losses on this financial asset, and
therefore as it has been derecognised, there is no longer a legally separable
reserve for these fair value gains and losses and as such the amount has been
transferred to retained earnings.
c) The merger reserve as at 3 March 2024 amounted to £568 million and was
created following the issuance of 261 million shares in 2016 as part
consideration for the acquisition of Home Retail Group plc. During the year,
£395 million has been transferred to retained earnings and classified as
available for distribution to shareholders in accordance with ICAEW Technical
Release 02/17BL section 3.9 following an impairment being recognised in J
Sainsbury's plc over its subsidiary's investment in the Acquisition holding
company. The related impairment has no impact on Group results.
d) During the period, 73.6 million of the Company's own shares, representing
3.14% of the called up share capital as at 1 March 2025, were purchased, and
subsequently cancelled, for total consideration of £200 million inclusive of
£6 million directly attributable costs. £200 million has been transferred
from the investment in own shares reserve to retained earnings and £21
million of share capital has been transferred to the capital redemption
reserve owing to the cancellation.
Consolidated cash flow statement
52 weeks to 1 March 2025 52 weeks to 2 March 2024
(restated*)
Note £m £m
Cash flows from operating activities
Cash generated from operations - continuing operations 17 1,776 2,510
Interest paid (359) (336)
Corporation tax paid (53) (61)
Net cash generated from operating activities - continuing operations 1,364 2,113
Cash flows from investing activities
Purchase of property, plant and equipment (617) (1,381)
Initial direct costs on new leases (34) (6)
Purchase of intangible assets (208) (178)
Proceeds from disposal of property, plant and equipment 45 77
Interest received 27 27
Net cash used in investing activities - continuing operations (787) (1,461)
Cash flows from financing activities
Proceeds from issuance of ordinary shares 20 15
Proceeds from borrowings 544 575
Repayment of borrowings (623) (41)
Purchase of own shares for share schemes (63) (18)
Purchase of own shares for cancellation (200) -
Capital repayment of lease obligations (487) (507)
Dividends paid on ordinary shares 10 (308) (306)
Net cash used in financing activities - continuing operations (1,117) (282)
Net increase in cash and cash equivalents
Continuing operations (540) 370
Discontinued operations 1,329 298
Total increase in cash and cash equivalents 789 668
Opening cash and cash equivalents 1,987 1,319
Closing cash and cash equivalents 17 2,776 1,987
*Comparative periods have been re-presented to separately disclose
discontinued operations. Refer to note 9 for further details.
Notes to the consolidated financial statements
1 General information
The financial information, which comprises the Consolidated income statement,
Consolidated statement of comprehensive income, Consolidated balance sheet,
Consolidated cash flow statement, Consolidated statement of changes in equity
and related notes, is derived from the full Consolidated financial statements
for the 52 weeks to 1 March 2025 (prior financial year: 52 weeks to 2 March
2024) and does not constitute full accounts within the meaning of section 435
(1) and (2) of the Companies Act 2006.
The Annual Report and Financial Statements 2025 on which the auditors have
given an unqualified report and which does not contain a statement under
section 498 (2) or (3) of the Companies Act 2006, will be delivered to the
Registrar of Companies in due course, and made available to shareholders in
June 2025.
J Sainsbury plc is a public limited company (the 'Company') incorporated in
the United Kingdom, whose shares are publicly traded on the London Stock
Exchange. The Company is domiciled in the United Kingdom and its registered
address is 33 Holborn, London EC1N 2HT, United Kingdom.
The consolidated financial statements for the 52 weeks to 1 March 2025
comprise the financial statements of the Company and its subsidiaries (the
'Group') and the Group's share of the post-tax results of its joint ventures
and associates.
The Group's principal activities are Food, General Merchandise and Clothing
retailing and Financial Services.
2 Basis of preparation
The Group's financial statements have been prepared in accordance with
UK-adopted international accounting standards.
They have been prepared under the historical cost convention, except for
certain financial instruments, defined benefit pension scheme assets and share
based payments.
Sainsbury's Bank plc and its subsidiaries have been consolidated for the
twelve months to 28 February 2025 being the Bank's year-end date (2024: 29
February 2024). Adjustments are made for the effects of significant
transactions or events that occur between this date and the Group's balance
sheet date.
Unless otherwise stated, material accounting policies have been applied
consistently to all periods presented in the financial statements although
certain presentational changes have been made with the objective of
simplification and to assist in and aid the users' understanding.
Discontinued operations
A discontinued operation is a component of the Group which represents a
separate major line of business which has been disposed of or is classified as
held for sale. Such classification assumes the expectation that the sale will
complete within twelve months of the assessment date.
Non-current assets (or disposal groups) are classified as assets held for sale
when their carrying amount is to be recovered principally through such sale
transactions. Assets and liabilities held for sale are measured at the lower
of their carrying amount and fair value less costs to sell.
Where the carrying amount of a non-current asset or disposal group held for
sale exceeds its fair value less costs to sell, a loss is recognised. This is
allocated firstly against any goodwill attributable to the disposal group, and
then to other non-current assets in the disposal group that are in scope of
IFRS 5 'Non-current assets held for sale and discontinued operations'
measurement requirements. Any excess loss remaining is recognised against the
remaining assets of the disposal group as a whole.
A component of the Group that is held for sale or disposed of is presented as
a discontinued operation either when it is a subsidiary acquired exclusively
with a view to resale or it represents, or is part of a coordinated plan to
dispose of, a separate major line of business.
Operations classified as discontinued are disclosed further in note 9.
Following the announcement on 20 June 2024 that the Group had entered into an
agreement for the sale of Sainsbury's Bank plc's personal loan, credit card
and retail deposit portfolios (together the "Core Banking Business") to
NatWest Group ("NatWest"), the agreement triggered a change in business model
as the objective is now to sell financial assets and no longer to hold for the
collection of contractual cash flows. The underlying portfolios have therefore
been reclassified from being measured at amortised cost to being measured at
fair value through profit and loss by reference to the pricing mechanism
within the sale agreement and reflects the market conditions prevailing at the
balance sheet date. Provisions for expected credit loss and effective interest
rate adjustments have been derecognised as a result. The adjustment has been
made prospectively from 15 September 2024, being the first day of the
reporting period following the change in business model. Prior to the
reclassification, the financial assets were classified and subsequently
measured at amortised cost using the effective interest method, net of any
loss allowance.
Amounts have been recognised within discontinued operations.
2.1 Going concern
The Directors are satisfied that the Group has sufficient resources to
continue in operation for a period of at least 12 months from the date of
approval. Accordingly, they continue to adopt the going concern basis in
preparing the financial statements. The assessment period for the purposes of
considering going concern is the 12 months to 16 April 2026.
In assessing the Group's ability to continue as a going concern, the Directors
have considered the Group's most recent corporate planning and budgeting
processes. This includes an annual review which considers profitability, the
Group's cash flows, committed funding and liquidity positions and forecasted
future funding requirements over three years, with a further year of
indicative movements.
The Group manages its financing by diversifying funding sources, for example
through the Investment Grade Corporate Bond markets and structuring core
borrowings with phased maturities to manage refinancing risk, evidenced by the
issuance in January 2025 of £550 million of Investment Grade Corporate Bonds,
split into two tranches, a £250 million tranche maturing in June 2030 and a
£300 million tranche maturing in January 2035. In addition, the Group has in
place an inflation-linked amortising loan with a principal of £438 million
outstanding at the reporting date. As at 1 March 2025, both facilities were
fully drawn.
The Group also seeks to minimise liquidity risk and maintain sufficient levels
of standby liquidity and a suitable level of undrawn additional funding
capacity via the Revolving Credit Facility. The Revolving Credit Facility of
£1,000 million comprises two £500 million facilities which were both
extended by a further 12 months during the year. This is the second extension
resulting in revised maturity dates of December 2029 for Facility A and
December 2028 for Facility B. As at 1 March 2025, the Revolving Credit
Facility was undrawn. No additional forms of financing are assumed in the
assessment of the Group as a going concern.
In assessing going concern, scenarios in relation to the Group's principal
risks have been considered in line with those disclosed in the viability
statement by overlaying them into the corporate plan and assessing the impact
on cash flows, net debt and funding headroom. These severe but plausible
scenarios included modelling inflationary pressures on both food margins and
general recession-related risks, the impact of any regulatory fines, and the
failure to deliver planned cost savings.
In performing the above analysis, the Directors have made certain assumptions
around the availability and effectiveness of the mitigating actions available
to the Group. These include reducing any non-essential capital expenditure and
suspending dividend payments.
The Group's most recent corporate planning and budgeting processes includes
assumed cashflows to address climate change risks, including costs associated
with initiatives in place as part of the Plan for Better commitment which
include reducing environmental impacts and meeting customer expectations in
this area, notably through sustainability initiatives such as reducing
packaging and reducing energy usage across the estate. Climate-related risks
do not result in any material uncertainties affecting the Group's ability to
continue as a going concern.
Specific additional consideration has been given to the phased withdrawal from
financial services as we transition to a distributed model, with assets and
operations being transferred to NatWest, NewDay, and NoteMachine. The strategy
change introduces new or amended risks in respect of liquidity and capital
adequacy which arise from the move to offer financial services products by
dedicated financial services providers and the phased withdrawal to a
third-party distributed model. Taking into account the current and forecast
levels of liquidity and capital together with the related headroom, the
Directors have considered and assessed the potential impact of the phased
withdrawal and the risks arising thereon. The evaluation has included costs to
exit being higher than planned and the ability to withstand unforeseen
scenarios such as planned divestments not concluding as expected. Having
undertaken this assessment, the Directors are satisfied that the Bank has
sufficient liquidity and capital resources to withstand severe but plausible
adverse scenarios stemming from the risks of the phased withdrawal, prior to
any additional mitigating actions being taken. Accordingly, it has been
concluded that this does not result in any material uncertainties affecting
the Group's ability to continue as a going concern.
As a consequence of the work performed, the Directors considered it
appropriate to adopt the going concern basis in preparing the Financial
Statements with no material uncertainties to disclose.
2.2 New accounting pronouncements
a) New accounting standards adopted by the Group
The Group has applied the following new standards and interpretations which
became effective in the 52 weeks to 1 March 2025:
· Amendments to IFRS 16: Lease liability in a sale and leaseback
· Amendments to IAS 1: Classification of liabilities as current or non-current
and non-current liabilities with covenants
· Amendments to IAS 7 and IFRS 7: Supplier finance arrangements
The new accounting standards, interpretations and amendments to standards and
IFRIC interpretations which became applicable during the year were either not
relevant or had no impact, or no material impact, on the Group's results or
net assets. Therefore, the adoption of the new standards and interpretations
listed above did not require any changes to be made to the Group accounting
policies and the policies have remained unchanged from those disclosed in the
Annual Report for the financial year ended 2 March 2024.
b) New accounting standards in issue but not yet effective
The following standards and interpretations were in issue at the date of
approval of these financial statements but not yet effective and therefore
have not been applied for the 52 weeks to 1 March 2025:
· Amendments to IAS 21: Lack of exchangeability
· Amendments to IFRS 9 and IFRS 7: Classification and measurement of financial
instruments
· IFRS 18: Presentation and disclosure in financial statements
· IFRS 19: Subsidiaries without public accountability
· Amendments to IFRS 9 and IFRS 7: Contracts Referencing Nature-dependent
Electricity
· Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture.
The adoption of the above standards and interpretations, with the exception of
the adoption of IFRS 18, is not expected to lead to any changes to the Group's
accounting policies nor to have any impact, or any material impact, on the
Group's results or net assets.
The impact of IFRS 18 'Presentation and disclosure in financial statements',
which will become effective in the consolidated Group financial statements for
the financial year ending 26 February 2028, subject to UK endorsement, is
still under assessment.
2.3 Alternative Performance Measures (APMs)
In the reporting of financial information, the Directors use various APMs.
These APMs should be considered in addition to, and are not intended to be a
substitute for, IFRS measurements. As they are not defined by International
Financial Reporting Standards, they may not be directly comparable with other
companies' APMs.
The Directors believe that these APMs provide additional useful information
for understanding the financial performance and health of the Group. They are
also used to enhance the comparability of information between reporting
periods (such as like-for-like sales and underlying performance measures) by
adjusting for non-recurring factors which affect IFRS measures, and to aid
users in understanding the Group's performance. Consequently, APMs are used by
the Directors and management for performance analysis, planning, reporting and
incentive setting purposes.
Non-underlying items
In order to provide shareholders with additional insight into the year-on-year
performance of the business, underlying profit measures are provided to
supplement the reported IFRS numbers and reflects how the business measures
performance internally. These adjusted measures exclude items recognised in
reported profit or loss before tax which, if included, could distort
comparability between periods. Underlying profit is not an IFRS measure and
therefore not directly comparable to other companies.
Reconciliations to IFRS measures
The income statement shows the non-underlying items excluded from reported
results to determine underlying results with a more detailed analysis of the
non-underlying items set out in note 3. Other APMs are detailed in notes A1,
A2, A3 and A4 of this report which includes further information on the
definition, purpose and reconciliation to the closest IFRS measure.
Changes to APMs
Following the Group's announcement over phased withdrawal from financial
services, the definition of the Group's Retail Free Cash Flow APM has been
updated during the period to now exclude capital injections to, dividends
from, and any other exceptional cash movements with or on behalf of
Sainsbury's Bank and its subsidiaries. This change results in more relevant
information as Retail Free Cash Flow will now solely present Retail cash flows
without any impacts of the phased withdrawal from financial services, and
enables management to assess solely the cash flows associated with its core
Retail operations. No comparatives have been restated as exceptional cash
movements with Sainsbury's Bank in the prior year were immaterial.
3 Non-underlying items
2025 2024
(restated*)
Restructuring and impairment Pensions Other Total Restructuring and impairment Pensions Other Total
3.1 3.2 3.3 3.1 3.2 3.3
£m £m £m £m £m £m £m £m
Cost of sales (80) - 2 (78) (73) - (66) (139)
Administrative expenses (75) (8) (17) (100) (49) (7) (15) (71)
Other income (4) - 57 53 - - 6 6
Affecting operating profit (159) (8) 42 (125) (122) (7) (75) (204)
Net finance (costs)/income (2) 36 (12) 22 (1) 51 (11) 39
Affecting profit before tax - continuing operations (161) 28 30 (103) (123) 44 (86) (165)
Income tax credit/(charge) 15 (7)
Affecting profit after tax - continuing operations (88) (172)
Loss on disposal after tax - discontinued operations (106) (11)
Restructuring and impairment costs after tax - discontinued operations (103) (196)
Affecting profit after tax - discontinued operations (209) (207)
Affecting profit for the financial period (297) (379)
*Comparative periods have been re-presented to separately disclose
discontinued operations. Refer to note 9 for further details.
The impact of non-underlying items on Retail cash generated from operations is
presented in note A2.2.
3.1 Restructuring and impairment
a) Restructuring
Financial Services model
As part of the phased withdrawal from financial services, costs incurred
associated with the exit that are directly attributable to the disposal group
have been classified as discontinued operations as set out in note 9.
Costs which are not directly attributable to the disposal group, but have
specifically been incurred as part of the phased withdrawal, have been
recognised within non-underlying items within continuing operations.
Retail restructuring programmes
In the year ended 6 March 2021, the Group announced a restructuring programme
to accelerate the structural integration of Sainsbury's and Argos and further
simplify the Argos business; create a new supply chain and logistics operating
model, and further rationalise/repurpose the Group's supermarkets and
convenience estate. The programme also considered the Group's Store Support
Centre ways of working.
Separately, as part of our Next Level Sainsbury's strategy implementation,
launched in the current year, we have commenced a multi-year restructuring
programme which will update our central management structures to support
faster decision making and drive performance at both Sainsbury's and Argos,
creating fewer, bigger roles with clearer accountabilities. In addition, it
was announced in the current year that we will be closing food counters,
converting cafes to expert partners, and converting remaining scratch
bakeries.
As the costs incurred facilitate future underlying cost savings, it was
considered whether it was appropriate to report these costs within underlying
profit. Whilst they arise from changes in the Group's underlying operations,
they can be separately identified, are material in size and do not relate to
ordinary in-year trading activity. In addition, the areas being closed or
restructured no longer relate to the Group's remaining underlying operations
and their exclusion provides meaningful comparison between financial years.
b) Non-Restructuring items
Impairments of non-financial assets
Separate from restructuring initiatives, the Group has recognised £16 million
of impairment (2024: £nil) in relation to non-trading sites, reflecting rent
reviews.
Analysis of restructuring and non-restructuring impairment items
2025 2024
(restated*)
Financial Services model Retail restructuring programmes Impairment of non-financial assets Total Financial Services model Retail restructuring programmes Total
Note £m £m £m £m £m £m £m
Non-financial asset impairments
Property, plant and equipment 17 - (4) - (4) (3) (1) (4)
Right-of-use assets 17 - - (16) (16) (3) (3) (6)
Intangible assets 17 - - - - (16) - (16)
- (4) (16) (20) (22) (4) (26)
Accelerated depreciation of assets (a)) - (42) - (42) - (19) (19)
Employee costs (b)) (8) (43) - (51) (3) (33) (36)
Onerous contracts (c)) (8) - - (8) - - -
Property closure provisions (d)) - (12) - (12) - (33) (33)
Other (costs)/gains (e)) (1) (27) - (28) (3) (6) (9)
(17) (128) (16) (161) (28) (95) (123)
*Comparative periods have been re-presented to separately disclose
discontinued operations. Refer to note 9 for further details.
a) The remaining useful economic lives of corresponding sites have been
reassessed to align with closure dates, resulting in an acceleration in
depreciation of these assets. The existing depreciation of these assets
(depreciation that would have been recognised absent of a closure decision) is
recognised within underlying expenses, whereas accelerated depreciation above
this is recognised within non-underlying expenses.
b) Comprises severance costs and for the Financial services model, also includes
incremental project related employee costs.
c) Comprises long-dated IT contracts where anticipated early termination will
result in unavoidable costs of meeting obligations under the contracts which
exceed the economic benefits expected to be received under them. Costs
represent the lower of the costs of fulfilling contracts and the costs of
terminating. Such amounts are reflected in provisions as set out in note 25.
d) Relates to onerous lease costs, dilapidations and strip-out costs on sites
that have been identified for closure, as well as business rates for sites the
Group no longer operates from which are recognised as incurred. Upon initial
recognition of such provisions, management uses its best estimates of the
relevant costs to be incurred as well as expected closure dates. Such amounts
are reflected in provisions as set out in note 25.
e) Other costs comprise predominantly consultancy costs.
3.2 Pensions
Such amounts relate to the defined benefit pension scheme (the Scheme) and are
treated as non-underlying owing to the Scheme being closed to future accrual
and accordingly not forming part of ongoing operating activities.
3.3 Other
2025 2024
(restated*)
£m £m
Property related transactions (a)) 57 (15)
Non-underlying finance and fair value movements (b)) (10) (56)
Acquisition adjustments (c)) (17) (15)
30 (86)
*Comparative periods have been re-presented to separately disclose
discontinued operations. Refer to note 9 for further details.
a) Predominantly relates to the profit on completion of the disposal of land
associated with the Hendon Mixed Used Development Scheme, which included the
closure of the existing supermarket and the recognition of a new supermarket
asset within property, plant and equipment. (2024: an impairment charge of
£19 million of property, plant and equipment was recognised in cost of sales
as part of the asset acquisition of 21 stores, whereby the asset base of these
stores' CGUs had significantly changed as a result of the transaction and
therefore were reviewed for impairment, offset by a gain on disposal of
non-trading properties of £4 million recognised in other income.)
b) Comprises £12 million (2024: £10 million) finance costs relating to lease
interest paid on impaired non-trading sites, and £2 million gain (2024: £46
million loss) within cost of sales relating to favourable (2024: unfavourable)
movements on long-term, fixed price power purchase arrangements (PPAs) with
independent producers. These are classified as derivatives which are not in a
hedge relationship and owing to potentially significant fluctuations in value
from external market factors are treated as non-underlying to enable
consistency between periods.
c) Comprises the unwind of non-cash fair value adjustments arising from the Home
Retail Group. Classification as non-underlying is because these assets would
not normally be recognised outside of a business combination.
4 Segment reporting
The Group's operating segments have been determined based on the information
regularly provided to the Chief Operating Decision Maker ("CODM"), which has
been determined to be the Group Operating Board, which is used to make optimal
decisions on the allocation of resources and assess performance.
In determining the Group's reportable segments, management have considered the
economic characteristics, in particular average gross margin, similarity of
products, production processes, customers, sales methods and the regulatory
environment of its two Retail operating segments. In doing so it has been
concluded that they should be aggregated into one 'Retail' reportable segment
within the financial statements given the similar economic characteristics
between the two. This aggregated information provides users the financial
information needed to evaluate the business and the environment in which it
operates.
The Group's reportable operating segments have therefore been identified as
follows:
· Retail; comprising the sale of food, household, general merchandise, clothing
and fuel primarily through store and online channels.
· Financial Services; comprising banking and insurance services through
Sainsbury's Bank and Argos Financial Services.
The CODM uses underlying profit before tax as the key measure of segmental
performance as it represents the ongoing trading performance with additional
insight into year-on-year performance that is more comparable over time. The
use of underlying profit before tax aims to provide parity and transparency
between users of the financial statements and the CODM in assessing the core
performance of the business and performance of management.
Segment results, include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Segment assets and
liabilities, including investments in associates and joint ventures, are not
disclosed because they are not reported to, or reviewed by, the CODM.
In presenting discontinued operations, income and costs directly attributable
to the discontinued operations are presented separately. A high proportion of
central and multi-product costs continue to be recognised within continuing
operations as they are not deemed to be directly attributable to the
discontinued operation.
4.1 Income statement
2025
Retail Financial Group - Continuing operations Group - Discontinued operations Group Total
Services
Note 9
Note £m £m £m £m £m
Revenue
Grocery, General Merchandise & Clothing 28,762 - 28,762 - 28,762
Fuel 3,868 - 3,868 - 3,868
Interest receivable - 103 103 273 376
Fees and commission - 79 79 57 136
32,630 182 32,812 330 33,142
Underlying operating profit/(loss)
Underlying operating profit/(loss) 1,036 (7) 1,029 37 1,066
Underlying finance income 31 - 31 - 31
Underlying finance costs (336) - (336) - (336)
Underlying profit/(loss) before tax 731 (7) 724 37 761
Non-underlying items 3 (103) (274) (377)
Profit/(loss) before tax 621 (237) 384
Income tax (expense)/credit 7 (201) 59 (142)
Profit/(loss) for the financial year 420 (178) 242
2024
Retail Financial Group - Continuing operations Group - Discontinued operations Group Total
Services
(restated*)
(restated*)
(restated*)
Note 9
Note £m £m £m £m £m
Revenue
Grocery, General Merchandise & Clothing 27,830 - 27,830 - 27,830
Fuel 4,254 - 4,254 - 4,254
Interest receivable - 79 79 414 493
Fees and commission - 75 75 69 144
32,084 154 32,238 483 32,721
Underlying operating profit/(loss)
Underlying operating profit/(loss) 966 (18) 948 47 995
Underlying finance income 30 - 30 - 30
Underlying finance costs (324) - (324) - (324)
Underlying profit/(loss) before tax 672 (18) 654 47 701
Non-underlying items 3 (165) (259) (424)
Profit/(loss) before tax 489 (212) 277
Income tax (expense)/credit 7 (181) 41 (140)
Profit/(loss) for the financial year 308 (171) 137
*Comparative periods have been re-presented to separately disclose
discontinued operations. Refer to note 11 for further details.
4.2 Balance sheet
2025 2024
Retail Financial Group Retail Financial Group
Services
Services
£m £m £m £m £m £m
Assets 18,423 6,223 24,646 18,288 6,771 25,059
Investments in joint ventures and associates 2 - 2 2 - 2
Segment assets 18,425 6,223 24,648 18,290 6,771 25,061
Segment liabilities (12,446) (5,551) (17,997) (12,171) (6,022) (18,193)
4.3 Other segment items
2025
Retail Financial Group - Continuing operations Group - Discontinued operations Group Total
Services
Note £m £m £m £m £m
Depreciation expense
Property, plant and equipment 11 532 - 532 - 532
Right-of-use assets 12 501 - 501 - 501
Amortisation expense
Intangible assets 13 182 - 182 - 182
Impairment of non-financial assets 14 22 - 22 - 22
Impairment loss on financial assets - 2 2 61 63
Share based payments 71 4 75 5 80
2024
Retail Financial Group - Continuing operations Group - Discontinued operations Group Total
Services
(restated*)
(restated*)
(restated*)
Note £m £m £m £m £m
Depreciation expense
Property, plant and equipment 11 538 - 538 1 539
Right-of-use assets 12 449 1 450 - 450
Amortisation expense
Intangible assets 13 159 13 172 17 189
Impairment of non-financial assets 14 23 22 45 152 197
Impairment of goodwill 14 - - - 38 38
Impairment loss/(reversal) on financial assets (4) 2 (2) 100 98
Share based payments 83 2 85 4 89
2025 2024
Retail Financial Group Retail Financial Group
Services
Services
Note £m £m £m £m £m £m
Additions to non-current assets
Property, plant and equipment 11 629 - 629 1,654 1 1,655
Intangible assets 13 208 - 208 165 13 178
Right-of-use assets 12 676 - 676 435 3 438
*Comparative periods have been re-presented to separately disclose
discontinued operations. Refer to note 9 for further details.
4.4 Geographical segments
In the current year, the Group traded in the UK and consequently the majority
of revenues, capital expenditure and segment net assets arise there. The
assets of the businesses in the Republic of Ireland and Asia, where the Group
does not trade but maintains an operational presence, are not material.
5 Supplier arrangements
The types of supplier arrangements applicable to the Group are as follows:
· Discounts and supplier incentives: Represent the majority of all supplier
arrangements and are linked to individual unit sales. The incentive is
typically based on an agreed sum per item sold on promotion for a period and
therefore is considered part of the purchase price of that product
· Fixed amounts: Agreed with suppliers primarily to support in-store activity
including promotions, such as utilising specific space
· Supplier rebates: Typically agreed on an annual basis, aligned with the
Group's financial year. The rebate amount is linked to pre-agreed targets such
as sales volumes
· Marketing and advertising income: Advertising income from suppliers and online
marketing and advertising campaigns within Argos
Recognised in income statement
2025 2024
£m £m
Fixed amounts 293 271
Supplier rebates 40 76
Marketing and advertising income 174 134
507 481
Discounts and supplier incentives are not shown as they are deemed to be part
of the cost price of inventory.
Held on the balance sheet
2025 2024
£m £m
Within inventory (2) (3)
Within current trade receivables
Supplier arrangements due 54 47
Accrued supplier arrangements 65 48
Within current trade payables
Supplier arrangements due 37 39
Accrued supplier arrangements - 1
Total supplier arrangements 154 132
Additionally, £18 million (2024: £nil) of supplier arrangements
contractually agreed but not yet earned is held on the balance sheet within
deferred income.
6 Finance income and finance costs
2025 2024
Underlying Non-underlying Total Underlying Non-underlying Total
Continuing operations £m £m £m £m £m £m
Interest on bank deposits and other financial assets 29 - 29 28 - 28
IAS 19 pension financing income - 36 36 - 51 51
Finance income on net investment in leases 2 - 2 2 - 2
Finance income 31 36 67 30 51 81
Secured borrowings (35) - (35) (38) - (38)
Unsecured borrowings (41) - (41) (33) - (33)
Lease liabilities (260) (12) (272) (253) (11) (264)
Provisions - amortisation of discount - (2) (2) - (1) (1)
Finance costs (336) (14) (350) (324) (12) (336)
7 Taxation
2025 2024
(restated*)
Continuing operations £m £m
Current tax
Corporation tax 124 129
Over provision in prior years (34) (4)
90 125
Deferred Tax
Origination and reversal of temporary differences 61 36
Under/(over) provision in prior years 54 (19)
Adjustment from change in applicable rate of deferred tax - (1)
(Recognition)/derecognition of capital losses (4) 40
111 56
Total income tax expense 201 181
Analysed as:
Underlying tax 216 174
Non-underlying tax (15) 7
Total income tax expense 201 181
Underlying tax rate 29.8% 26.7%
Effective tax rate 32.4% 37.1%
*Comparative periods have been re-presented to separately disclose
discontinued operations. Tax associated with discontinued operations is
presented in note 9.
The Group is within the scope of global minimum tax ('GMT') under the OECD
Pillar Two rules ('Pillar Two)'. Pillar Two reporting requirements were
enacted for the UK on 18 July 2023 and apply to the Group from the period
ended 1 March 2025. Under these requirements, the Group is liable to pay a top
up tax for any deficit between the minimum tax rate of 15% and the effective
tax rate per jurisdiction. As a primarily UK focussed Group, we do not
anticipate the impact of any GMT being material, and anticipate being able to
benefit from the transitional safe harbour rules for the majority of the
Group's overseas subsidiaries.
It is unclear if the Pillar Two model rules create additional temporary
differences, whether to remeasure deferred taxes and which tax rate to use to
measure deferred taxes. The Group has therefore applied the mandatory
temporary exception in the amended IAS 12 'Income taxes' from the requirement
to recognise or disclose information about deferred tax assets and liabilities
related to the proposed Pillar Two model rules.
8 Earnings per share
The calculations of basic and underlying basic earnings per share are based on
profit after tax and underlying profit after tax for the financial year,
respectively, divided by the weighted average number of Ordinary shares in
issue during the year, excluding own shares held by the Employee Share
Ownership Trust (ESOT).
Underlying earnings per share figures, which represent alternative performance
measures, have been calculated based on total profit after tax attributable to
shareholders before non-underlying items which are set out in note 3.
Diluted and underlying diluted earnings per share are calculated on the same
basis as basic and underlying basic earnings per share, but where the weighted
average share numbers have also been adjusted for the weighted average effects
of potentially dilutive shares. Such potentially dilutive shares comprise
share options and awards granted to employees where the scheme to date
performance is deemed to have been earned.
2025 2024
(restated*)
Note million million
Weighted average number of shares in issue for calculating basic earnings per 2,330.6 2,334.8
share
Weighted average number of dilutive share options 43.5 59.2
Weighted average number of shares in issue for calculating diluted earnings 2,374.1 2,394.0
per share
£m £m
Underlying profit after tax attributable to ordinary shareholders of the 539 516
parent
Adjustment for non-underlying items net of tax 3 (297) (379)
Profit after tax attributable to ordinary shareholders of the parent - 420 308
continuing operations
Loss after tax from discontinued operations 9 (178) (171)
Profit after tax attributable to ordinary shareholders of the parent 242 137
Earnings per share Pence per share Pence per share (restated*)
Basic 10.4 5.9
Diluted 10.2 5.7
Basic - discontinued operations (7.6) (7.3)
Diluted - discontinued operations (7.5) (7.2)
Basic - continuing operations 18.0 13.2
Diluted - continuing operations 17.7 12.9
Basic - underlying 23.1 22.1
Diluted - underlying 22.7 21.6
*Comparative periods have been re-presented to separately disclose
discontinued operations. Refer to note 9 for further details.
9 Discontinued operations
In January 2024 the Group announced it had completed its strategic review of
the Financial Services division, culminating in a single co-ordinated plan to
move to a third-party distributed model. Owing to the complex nature of assets
and liabilities that make up the separate major line of business, this will
result in a phased withdrawal with components completing at various stages.
Following the announcement on 20 June 2024 that the Group had entered into an
agreement for the sale of Sainsbury's Bank plc's personal loan, credit card
and retail deposit portfolios (together the "Core Banking Business") to
NatWest Group ("NatWest"), the associated assets and liabilities of the
disposal group were classified as held for sale. The sale is expected to
complete in the first half of calendar year 2025. The announced agreement
subsequently triggered a change in business model in accordance with IFRS 9
'Financial Instruments' as the objective is to sell financial assets and no
longer to hold for the collection of contractual cash flows. The underlying
portfolios within the disposal group have therefore been reclassified from
being measured at amortised cost to being measured at fair value through
profit and loss by reference to the pricing mechanism within sale agreement
and reflects the market conditions prevailing at the balance sheet date. The
adjustment has been made prospectively from 15 September, being the first day
of the reporting period following the change in business mode. Prior to the
reclassification the financial assets were classified and subsequently
measured at amortised cost using the effective interest method, net of any
loss allowance, whilst the disposal group was measured at fair value less
costs to sell in accordance with IFRS 5 'Non-current assets held for sale and
discontinued operations'.
On 25 September 2024, the Group announced the sale of its ATM estate to
NoteMachine, with transfer of assets expected to be completed by May 2025.
Following the transfer, the Group will cease manufactured ATM operations. At
the balance sheet date, remaining ATM assets are classified as held for sale.
Following the classification of the Core Banking Business and ATMs as held for
sale, and both components forming part of the single co-ordinated plan to move
to a third-party distributed model, results have also been re-presented to
classify the operations as discontinued.
On 31 October 2024 the Group announced it had entered into an agreement for
the sale of AFS cards to NewDay Group representing the next phase of the
single co-ordinated plan to move to a third-party distributed model. As a
result, results have been re-presented to classify the operations as
discontinued. The sale subsequently completed on 28 February 2025 with
associated assets being derecognised as a result.
In August 2023, the Group disposed of its mortgage portfolio which in
isolation was not sufficiently material to be classified as a discontinued
operation at that time but did form part of the move to a third-party
distributed model in prior periods and accordingly has now been reclassified
as a discontinued operation for the 52 week period to 2 March 2024.
The loss for these operations is set out in note 9.2 with associated
non-underlying items previously included in continuing operations set out in
note 9.3. Further costs associated with this restructuring will be incurred in
future years as further detailed plans to execute these changes are formulated
and communicated. Loss on disposal is measured by reference to the fair value
of portfolios at the balance sheet date, or in the case of AFS cards by
reference to the fair value of consideration received, as set out in note 9.4.
9.1 Discontinued operations total loss after tax
2025 2024
Note £m £m
Loss after tax 9.2 (72) (160)
Net loss arising from disposals 9.4 (106) (11)
Loss after tax (178) (171)
Of which:
Underlying items 31 36
Non-underlying items 9.3, 9.4 (209) (207)
Loss after tax (178) (171)
9.2 Discontinued operations loss after tax excluding net loss arising from
disposals
2025 2024
Note £m £m
Revenue
Interest receivable 273 414
Fees and commission income 57 69
330 483
Operating costs (293) (436)
Operating profit, excluding non-underlying restructuring costs 37 47
Non-underlying restructuring and impairment costs (a)) 9.3 (133) (245)
Loss before tax (96) (198)
Income tax credit 24 38
Loss after tax (72) (160)
a) Amounts for 2025 have been recognised in administrative expenses (2024: £21
million effective interest rate adjustment to financial assets was recognised
in revenue, with the remaining £224 million recognised in administrative
expenses).
9.3 Non-underlying restructuring and impairment costs included in discontinued
operations
2025 2024
£m £m
Impairment charges (a)) - (190)
Employee costs (b)) (43) (6)
Onerous contracts (c)) (75) (17)
Effective interest rate adjustment to financial assets (d)) - (21)
Other costs (e)) (15) (11)
(133) (245)
Income tax credit 30 49
(103) (196)
a) 2024: comprises impairment charges of property, plant and equipment, and
intangible assets including goodwill.
b) Comprises severance costs and incremental employee costs.
c) Comprises long dated IT contracts where early termination will result in
incremental costs to exit. Costs represent the lower of the costs of
fulfilling contracts and the costs of terminating.
d) 2024: The withdrawal from core banking operations has a commercial impact upon
future management initiatives and potential impact on customer behaviours.
This required refreshed assumptions in the calculation of the effective
interest rate, reducing the amortised cost of financial assets with the
impacts being recognised in revenue.
e) Comprises loss on derivatives no longer classified in an effective hedge
relationship, and consultancy costs (2024: comprises consultancy costs).
9.4 Discontinued operations net loss arising from disposals
2025 2024
£m £m
Fair value of consideration received/(payable) (a)) 149 446
Fair value of net assets disposed (b)) (218) (457)
Write down of net liabilities/loss on net assets disposed (c)) (69) (11)
Costs of disposal (d)) (72) (3)
Loss on disposal before tax (141) (14)
Income tax credit 35 3
Loss on disposal after tax (106) (11)
a) Comprises amounts payable in relation to the core banking activities with net
liabilities inclusive of a £132 million discount on gross assets based on
pricing mechanisms set out in the sale agreement but measured at the reporting
date. The discount at expected point of completion in 2025 is £125 million
(2024: comprises proceeds in respect of the sale of the mortgage portfolio).
Amounts are offset by £749 million related to AFS cards and the debt
instrument notes derecognised, and £2 million related to the ATM assets.
b) Comprises the fair value of assets and liabilities of the core banking
portfolios held for sale, AFS cards assets disposed inclusive of £24 million
goodwill previously allocated to the Home Retail Group CGU, and ATM related
assets (2024: Comprises the fair value of the assets and liabilities of the
mortgage portfolio inclusive of £7 million goodwill).
c) By the point of completion of the core banking sale in the first half of
calendar year 2025, the write down of net assets disposed is expected to be up
to £7 million lower than the amount recognised as at 1 March 2025.
Furthermore, the total loss on disposal by this point will also include
further incremental legal and consultancy costs to be incurred.
d) Relates to disposal costs comprising legal, consultancy and migration costs
directly associated with the sale.
9.5 Assets and liabilities of disposal group and non-current assets classified
as held for sale
2025
Note £m
Non-current assets classified as held for sale
ATM assets 1
Assets of disposal group classified as held for sale
Unsecured balances 2,512
Intangible assets (a)) 13 -
2,512
Total assets of disposal group and non-current assets classified as held for 15 2,513
sale
Liabilities of disposal group classified as held for sale
Customer deposits (3,109)
Provisions for costs of disposal (27)
Total liabilities of disposal group classified as held for sale (3,136)
Net liabilities held for sale associated with discontinued operations (623)
a) Represents the cost and associated accumulated amortisation and impairment of
£38 million for goodwill and £39 million for acquired intangibles deemed
directly attributable to the disposal group.
9.6 Discontinued operations cash flow statement
2025 2024
£m £m
Net cash flows from:
Operating activities 579 (148)
Investing activities (a)) 750 446
1,329 298
a) Net cash flows generated from investing activities primarily relate to
proceeds received from the disposal of AFS cards and cash receipts from the
sale of a debt instrument that formed part consideration under the
arrangement. Inflows of £446 million in 2024 relate to the disposal of the
mortgage portfolio.
10 Dividends
2025 2024 2025 2024
pence per share pence per share £m £m
Amounts recognised as distributions to ordinary shareholders
Final dividend for financial year ended 4 March 2023 - 9.2 - 215
Interim dividend for financial year ended 2 March 2024 - 3.9 - 91
Final dividend for financial year ended 2 March 2024 9.2 - 217 -
Interim dividend for financial year ended 1 March 2025 3.9 - 91 -
13.1 13.1 308 306
Proposed final dividend at financial year-end 9.7 223
The proposed final dividend was approved by the Board on 16 April 2025 and is
subject to shareholders' approval at the Annual General Meeting. If approved,
it will be paid on 11 July 2025 to shareholders on the register as at 6 June
2025. No amount for the proposed final dividend has been recognised at the
balance sheet date.
11 Property, plant and equipment
2025 2024
Land and buildings Fixtures and equipment Total Land and buildings Fixtures and equipment Total
Note £m £m £m £m £m £m
Cost
At beginning of financial year 11,154 4,919 16,073 9,865 5,029 14,894
Acquisition - - - 1,021 - 1,021
Additions 280 349 629 274 360 634
Disposals (26) (730) (756) (1) (470) (471)
Transfer to assets held for sale 15 (27) (33) (60) (5) - (5)
At end of financial year 11,381 4,505 15,886 11,154 4,919 16,073
Accumulated depreciation and impairment
At beginning of financial year 3,347 3,444 6,791 3,153 3,540 6,693
Depreciation expense 203 329 532 186 353 539
Impairment loss 14 1 5 6 8 21 29
Disposals (22) (727) (749) - (470) (470)
Transfer to assets held for sale 15 (21) (31) (52) - - -
At end of financial year 3,508 3,020 6,528 3,347 3,444 6,791
Net book value 7,873 1,485 9,358 7,807 1,475 9,282
Capital work-in-progress included above 202 56 258 115 56 171
Transfers to assets held from sale in the year relate to Retail non-current
assets held for sale and do not form part of the disposal group.
12 Leases
Group as a lessee
a) Right-of-use assets
2025 2024
Note Land and buildings Equipment Total Land and buildings Equipment Total
Net book value £m £m £m £m £m £m
At beginning of financial year 3,976 320 4,296 5,032 313 5,345
New leases and modifications 487 189 676 334 104 438
Impairment loss 14 (16) - (16) (6) - (6)
Depreciation expense (392) (109) (501) (353) (97) (450)
Derecognised as part of asset acquisition - - - (1,031) - (1,031)
At end of financial year 4,055 400 4,455 3,976 320 4,296
b) Lease liabilities
2025 2024
Note £m £m
At beginning of financial year 5,354 6,489
New leases and modifications 627 414
Derecognised as part of asset acquisition - (1,042)
Interest expense 6 272 264
Payments (759) (771)
At end of financial year 5,494 5,354
13 Intangible assets
Goodwill Computer software Acquired brands Customer relationships Total
Note £m £m £m £m £m
Cost
At 3 March 2024 384 1,235 229 32 1,880
Additions - 208 - - 208
Disposals (24) (93) - - (117)
Transfer to assets held for sale 15 (38) - (39) - (77)
At 1 March 2025 322 1,350 190 32 1,894
Accumulated amortisation and impairment
At 3 March 2024 77 780 185 32 1,074
Amortisation expense - 164 18 - 182
Disposals - (92) - - (92)
Transfer to assets held for sale 15 (38) - (39) - (77)
At 1 March 2025 39 852 164 32 1,087
Net book value at 1 March 2025 283 498 26 - 807
Capital work-in-progress included above - 63 - - 63
Cost
At 5 March 2023 391 1,105 229 32 1,757
Additions - 178 - - 178
Disposals (7) (48) - - (55)
At 2 March 2024 384 1,235 229 32 1,880
Accumulated amortisation and impairment
At 5 March 2023 39 495 167 32 733
Amortisation expense - 171 18 - 189
Impairment loss 14 38 162 - - 200
Disposals - (48) - - (48)
At 2 March 2024 77 780 185 32 1,074
Net book value at 2 March 2024 307 455 44 - 806
Capital work-in-progress included above - 44 - - 44
Following the agreement to sell core banking portfolios announced during the
year, the cost and associated accumulated amortisation and impairment of £38
million for goodwill and £39 million for acquired brands has been transferred
to the disposal group classified as held for sale. A further £24 million of
goodwill previously allocated to the Home Retail Group CGU has been
derecognised following the disposal of AFS cards.
Disposal of goodwill in 2024 relates to the disposal of the mortgage book.
14 Impairment of non-financial assets
14.1 Impairment testing
Cash Generating Units
For the purpose of impairment testing, cash generating units are determined by
reference to the smallest identifiable group of assets that generates cash
flows independent from other assets or group of assets. These have been
assessed as:
· Individual assets
· Individual stores representing the collective assets directly attributable to
each respective store
· Group of stores representing local fulfilment centres and hub-stores within
Argos where each site serves a defined set of hub-stores
· Corporate level covering the principal brands of the Group: Sainsbury's,
Argos, Nectar and Sainsbury's Bank.
Central assets and associated cash flows are allocated to the respective
Corporate level CGU to which they relate and are attributed to the lowest
level CGU to the extent that they are reasonably and consistently allocable,
estimated by reference to store sales.
For the purpose of impairment, goodwill acquired is allocated to the CGU that
is expected to benefit from the synergies of the combination.
Recoverable amount
The recoverable amount of individual assets, stores and group of store CGUs is
measured as the higher of fair value less cost to dispose and the value-in-use
of cash flows expected to be independently generated. The recoverable amount
for Corporate level CGUs is measured as the value-in-use.
In measuring the value-in-use, cash flow projections are based on the latest
management approved forecast covering a four-year period and beyond four years
the final year forecast is extrapolated based on the estimated average
long-term growth rate. Long-term sales and cost projections consider the
outlook for addressable markets, competitor behaviour, estimation on inflation
and market rates, the prevailing macro and microeconomic climate and committed
initiatives. In forming these projections, management draws on past experience
as a basis of forecasting future performance. Cash flows are then adjusted to
remove the impact of estimated future cash flows expected to arise from
strategic capital expenditure not yet incurred. For the purpose of store-level
and group of store-level CGUs, base cash flows are derived from the relative
current year performance and extrapolated by reference to the adjusted
operating profit growth approved by management.
Key assumptions
· Long-term growth rate: measured by reference to average historical GDP growth;
· Discount rates: Representing the weighted average cost of capital (WACC),
calculated using the capital asset pricing model, the inputs of which include
a 20-year average risk-free rate for the UK, a UK equity risk premium, levered
debt premium and risk adjustment and an average beta for the Group ; and
· Cash flow length: where the useful economic life exceeds management's cash
flow projects, the final year is extrapolated out to the sooner of perpetuity
using a terminal value and contractually committed tenure. Properties
identified for closure will be assessed by reference to the committed exit
date.
The value attributed to each assumption in measuring the recoverable amount of
components with attributed goodwill are as follows:
2025 2024
Pre-tax discount rate Post-tax discount rate Long-term growth rate Pre-tax discount rate Post-tax discount rate Long-term growth rate
Home Retail Group 11.0% 8.3% 2% 8.9% 6.6% 2%
Nectar UK 9.1% 6.8% 2% 8.9% 6.6% 2%
Jacksons Stores Limited 9.1% 6.8% 2% 8.9% 6.6% 2%
Bells Stores Limited 9.1% 6.8% 2% 8.9% 6.6% 2%
Other 9.1% 6.8% 2% 8.9% 6.6% 2%
Sainsbury's Bank (a)) - - - 14.7% 11.0% 2%
a) Following the announced restructuring of the Financial Services business in
January 2024, a full impairment review was undertaken in the prior year
resulting in a £212 million impairment being recognised over non-financial
assets, inclusive of £38 million goodwill as further disclosed in note 9. For
Financial Services products not directly impacted by the phased withdrawal,
the assumed growth rate of 2% was applied to extrapolate future cash flows
beyond management's four-year forecast.
14.2 Non-financial assets
a) Impairment charges
In line with the assumptions noted above, the Group assessed whether an
indicator of impairment existed at the reporting date. Given Argos trading
performance was below expectations, it was determined that an indicator of
impairment existed over the Group's Argos assets and therefore a full
impairment review was undertaken. £2 million of impairment was recognised as
a result of this review.
Separate to the indicator of impairment assessment, the Group recognised £4
million of impairment as part of retail restructuring programmes, and £16
million of impairment in relation to non-trading sites reflecting rent
reviews.
2025 2024
Retail Financial Services Total Retail Financial Services Total
Note £m £m £m £m £m £m
Balance sheet
Property, plant and equipment 6 - 6 20 9 29
Right-of-use assets 16 - 16 3 3 6
Intangible assets - - - - 200 200
Total impairment loss 22 - 22 23 212 235
Income statement
Comprising
Within non-underlying items
Restructuring programmes 3.1 4 - 4 4 212 216
Non-restructuring programmes 3.1 16 - 16 19 - 19
Within underlying items
Argos store assets 2 - 2 - - -
Total impairment loss 22 - 22 23 212 235
Discontinued operations - - - - 190 190
Continuing operations 22 - 22 23 22 45
b) Sensitivity
For all impairments recognised, management is satisfied that there are no
reasonably possible changes in assumptions that would lead to the recognition
of a materially different impairment charge.
14.3 Goodwill
Following the disposal of AFS cards (refer to note 9 for more details),
goodwill of £24 million was reallocated from the Home Retail Group CGU and
subsequently derecognised on disposal. The remaining £95 million of goodwill
continues to be attributed to the Home Retail Group that comprises operations
related to the Argos brand. There was no impairment of the remaining goodwill
associated with Home Retail Group.
a) Impairment charges
The following impairment charges are included within the intangible assets
impairment presented in note 14.2.
2025 2024
£m £m
Sainsbury's Bank plc - 38
Value-in-use calculations used to derive the recoverable amount of the CGU to
which the respective goodwill has been allocated are measured as outlined
above with discount rate and cash flow projections representing the key
measurement assumptions.
b) Sensitivities
Sensitivity analysis on the impairment tests for each group of CGUs to which
goodwill has been allocated has been performed.
Headroom
Discount rate Cash flows
Headroom -2pts +2pts -25% +25%
£m £m £m £m £m
Home Retail Group (a)) 22 132 (51) (57) 100
Nectar UK (a)) 1,534 2,203 1,160 1,109 1,959
Jacksons Stores Limited (b)) 79 98 66 51 107
Bells Stores Limited (b)) 29 33 27 18 39
Other 49 79 32 25 74
a) Cash flows derived from Board-approved projections for four years and then
extrapolated into perpetuity with an assumed growth rate of up to 2.0% as a
corporate level CGU
b) Goodwill balances are allocated to individual store CGUs to which they relate.
15 Assets and liabilities of disposal group and non-current assets held for
sale
As described in note 9, in the period the Group announced the sale of its Core
Banking Business and ATM estate, which are due to complete in the first half
of the calendar year 2025. Consequently, assets and liabilities of £2,512
million and £3,136 million, of the core banking disposal group are classified
as held for sale and measured at fair value through profit and loss by
reference to the pricing mechanism within sale agreement and reflects the
market conditions prevailing at the balance sheet date. As such, amounts
classified as held for sale for the core banking disposal group during the
period are reported net of any portfolio unwind and fair value movements
between the point of initial classification and the reporting date.
Non-current assets of £15 million comprise £1 million of ATM assets and £14
million of retail related assets. Proceeds from disposals of non-current
assets held for sale for continuing operations have been presented within
proceeds from disposal of property, plant and equipment in the Group cash flow
statement.
15.1 Assets of disposal group and non-current assets held for sale
2025 2024
£m £m
Opening balance 10 8
Acquisitions - 63
Classified as held for sale in the year 2,521 15
No longer classified as held for sale - (10)
Sold in the year (4) (66)
Closing balance 2,527 10
Of which
Assets of disposal group held for sale 2,512 -
Non-current assets classified as held for sale 15 10
2,527 10
15.2 Liabilities of disposal group held for sale
2025 2024
£m £m
Opening balance - -
Classified as held for sale in the period (3,136) -
Closing balance (3,136) -
Assets held for sale are stated at the lower of the carrying amount and fair
value less costs to dispose. The fair value of non-current assets held for
sale are based on independent market valuations of the assets and the fair
value of assets of disposal group held for sale are based on contractually
committed pricing mechanisms.
Acquisitions in the prior year relate to the asset acquisition of four
properties, which were sold to a third party for £61 million. The fifth and
final property acquired as part of the asset acquisition was sold to a third
party in the 52 weeks ended 1 March 2025.
Amounts no longer classified as held for sale relate to circumstances where it
is no longer considered highly probable that a sale will occur within the next
12 months. Amounts reclassified are adjusted for any depreciation or
amortisation that would have been recognised had the asset not been classified
as held for sale.
16 Provisions
Retail Financial Services
Property provisions Insurance provisions Restructuring programmes Other provisions Onerous contracts Restructuring programmes Other provisions Total
a) b) c) d) c) e)
£m £m £m £m £m £m £m £m
At 3 March 2024 120 59 51 11 17 - 22 280
Additional provisions 18 28 50 9 84 36 12 237
Unused amounts released (20) - (7) (1) (3) - (11) (42)
Utilisation of provision (14) (24) (31) (9) (3) (4) (1) (86)
Amortisation of discount 1 - 1 - - - - 2
Transfer to assets held for sale - - - - - - (4) (4)
At 1 March 2025 105 63 64 10 95 32 18 387
Current 30 12 40 5 95 30 18 230
Non-current 75 51 24 5 - 2 - 157
At 5 March 2023 114 59 58 13 - - 28 272
Additional provisions 77 22 42 - 18 - - 159
Unused amounts released (19) - (8) (2) - - (6) (35)
Utilisation of provision (52) (22) (42) - (1) - - (117)
Amortisation of discount - - 1 - - - - 1
At 2 March 2024 120 59 51 11 17 - 22 280
Current 45 13 28 5 - - 22 113
Non-current 75 46 23 6 17 - - 167
a) Property provisions comprise onerous property contract provisions for the
least net cost of exiting from the contract and provisions for dilapidations.
b) Insurance provisions comprise liabilities in respect of outstanding insurance
claims in relation to public liability, employer's liability and third party
motor.
c) Restructuring programme provisions comprise mainly redundancies as described
in note 3.1, and for financial services, note 9.3.
d) Onerous contract provisions comprise onerous contracts recognised as a result
of the phased withdrawal from financial services as described in notes 3.1 and
9.3.
e) Financial services other provisions comprise contractually committed costs
related to the disposal of AFS cards and potential customer redress payable
arising from the historic sale of Payment Protection Insurance. Amounts
released in the current year primarily relate to off balance sheet expected
credit loss provisions following the disposal of AFS cards.
17 Cash and cash equivalents
17.1 Reconciliation of operating profit to net cash generated from operations
2025 2024
(restated*)
Note £m £m
Operating profit 904 744
Depreciation 11, 12 1,033 988
Amortisation 13 182 172
Net impairment loss on non-financial assets 11, 12, 13 22 45
Profit on sale of non-current assets and early termination of leases (53) (16)
Non-underlying fair value movements 3 (2) 46
Share-based payments expense 75 85
Defined benefit scheme expense 20 8 7
Cash contributions to defined benefit scheme 20 (45) (44)
Operating cash flows before changes in working capital 2,124 2,027
Changes in working capital
Decrease in inventories - 5
Increase in financial assets at fair value through other comprehensive income (603) (135)
Decrease in trade and other receivables 15 3
Decrease in amounts due from Financial Services customers and other deposits - 103
Increase in trade and other payables 247 163
Increase in amounts due to Financial Services customers and other deposits - 345
Decrease in provisions (7) (1)
Cash generated from operating activities - continuing operations 1,776 2,510
*Comparative periods have been re-presented to separately disclose
discontinued operations. Refer to note 9 for further details.
17.2 Balance sheet
2025 2024
£m £m
Cash in hand and bank balances 439 606
Money market funds 1,154 263
Money market deposits 141 232
Deposits at central banks 1,043 886
Cash and cash equivalents 2,777 1,987
Bank overdrafts (1) -
Net cash and cash equivalents 2,776 1,987
Restricted amounts included above
Held as a reserve deposit with the Bank of England - 14
For insurance purposes 3 7
3 21
17.3 Cash flow statement
2025
· Amounts due from Financial Service customers and other banks: £4,517 million
balance sheet movement explained by £2,512 million transferred to assets held
for sale on the balance sheet (Note 9.5) and £2,005 million cash inflows
presented within discontinued operations in the cash flow statement (Note 9.6)
· Amounts due to Financial Service customers and other deposits: £3,573 million
balance sheet movement explained by £3,109 million transferred to liabilities
held for sale on the balance sheet (Note 9.5) and £644 million cash outflows
presented within discontinued operations in the cash flow statement (Note 9.6)
· Trade and other receivables: £76 million balance sheet movement mainly
explained by cash inflows presented within discontinued operations in the cash
flow statement (Note 9.6)
· Provisions: £107 million balance sheet movement mainly explained by cash
outflows presented within discontinued operations in the cash flow statement
(Note 9.6)
2024
· Amounts due from Financial Service customers and other banks: £875 million
balance sheet movement explained mainly by £775 million cash inflows
presented within discontinued operations in the cash flow statement (Note 9.6)
and £103 million cash inflows presented within continuing operations (Note
17.1)
· Amounts due to Financial Service customers and other deposits: £225 million
balance sheet movement explained mainly by £570 million cash outflows
presented within discontinued operations in the cash flow statement (Note 9.6)
offset by £345 million cash inflows presented within continuing operations
(Note 17.1)
18 Analysis of net debt
The Group's definition of net debt includes the following:
· Cash
· Borrowings and overdrafts
· Lease liabilities
· Debt-related financial assets at fair value through other comprehensive income
· Derivatives used in hedging borrowings
Derivatives exclude those not used to hedge borrowings, and borrowings exclude
bank overdrafts as they are disclosed separately.
18.1 Reconciliation of opening to closing net debt
Cash Movements Non-Cash Movements
3 March 2024 Cash flows excluding interest Net interest (received) / paid Accrued interest Other non-cash movements 1 March 2025
£m £m £m £m £m £m
Retail
Net derivative financial instruments - - (1) - - (1)
Borrowings (excluding overdrafts) (1,077) 79 76 (67) - (989)
Lease liabilities (5,354) 487 272 (272) (627) (5,494)
Purchase of own shares - share buyback - 200 - - (200) -
Arising from financing activities (6,431) 766 347 (339) (827) (6,484)
Cash and cash equivalents 877 (150) - - - 727
Bank overdrafts - (1) - - - (1)
Less: Purchase of own shares - share buyback - (200) - - 200 -
Retail net debt (5,554) 415 347 (339) (627) (5,758)
Financial Services
Net derivative financial instruments - - - - (2) (2)
Borrowings (excluding overdrafts) (122) - 12 (12) (2) (124)
Lease liabilities - - - - - -
Arising from financing activities (122) - 12 (12) (4) (126)
Financial assets at fair value through other comprehensive income 761 609 - - (1) 1,369
Cash and cash equivalents 1,110 940 - - - 2,050
Financial services net debt 1,749 1,549 12 (12) (5) 3,293
Group
Net derivative financial instruments - - (1) - (2) (3)
Borrowings (excluding overdrafts) (1,199) 79 88 (79) (2) (1,113)
Lease liabilities (5,354) 487 272 (272) (627) (5,494)
Purchase of own shares - share buyback - 200 - - (200) -
Arising from financing activities (6,553) 766 359 (351) (831) (6,610)
Financial assets at fair value through other comprehensive income 761 609 - - (1) 1,369
Cash and cash equivalents 1,987 790 - - - 2,777
Bank overdrafts - (1) - - - (1)
Less: Purchase of own shares - share buyback - (200) - - 200 -
Group net debt (3,805) 1,964 359 (351) (632) (2,465)
Other non-cash movements relate to new leases and foreign exchange.
Cash Movements Non-Cash Movements
5 March 2023 Cash flows excluding interest Net interest (received) / paid Accrued interest Other non-cash movements 2 March 2024
£m £m £m £m £m £m
Retail
Net derivative financial instruments - - (1) 1 - -
Borrowings (excluding overdrafts) (539) (534) 60 (64) - (1,077)
Lease liabilities (6,488) 505 264 (264) 629 (5,354)
Arising from financing activities (7,027) (29) 323 (327) 629 (6,431)
Cash and cash equivalents 683 194 - - - 877
Retail net debt (6,344) 165 323 (327) 629 (5,554)
Financial Services
Borrowings (excluding overdrafts) (122) - 13 (13) - (122)
Lease liabilities (1) 2 - - (1) -
Arising from financing activities (123) 2 13 (13) (1) (122)
Financial assets at fair value through other comprehensive income 626 135 - - - 761
Cash and cash equivalents 636 474 - - - 1,110
Financial services net debt 1,139 611 13 (13) (1) 1,749
Group
Net derivative financial instruments - - (1) 1 - -
Borrowings (excluding overdrafts) (661) (534) 73 (77) - (1,199)
Lease liabilities (6,489) 507 264 (264) 628 (5,354)
Arising from financing activities (7,150) (27) 336 (340) 628 (6,553)
Financial assets at fair value through other comprehensive income 626 135 - - - 761
Cash and cash equivalents 1,319 668 - - - 1,987
Group net debt (5,205) 776 336 (340) 628 (3,805)
19 Borrowings
2025 2024
Current Non-current Total Current Non-current Total
£m £m £m £m £m £m
Loan due 2031 64 383 447 54 442 496
Term loan due 2026 - - - 6 575 581
Unsecured bond 3 547 550 - - -
Sainsbury's Bank Tier 2 Capital 6 118 124 6 116 122
Bank overdrafts 1 - 1 - - -
74 1,048 1,122 66 1,133 1,199
Transaction costs (2) (6) (8) (1) (3) (4)
72 1,042 1,114 65 1,130 1,195
19.1 Loan due 2031
The loan is secured against 48 (2024: 48) supermarket properties. This is an
inflation-linked amortising loan from the finance company Longstone Finance
plc with an outstanding principal value of £438 million (2024: £486 million)
fixed at a real rate of 2.36 per cent where the principal and interest rate
are uplifted annually by RPI subject to a cap at 5 per cent and a floor at 0
per cent. The loan has a final repayment date of April 2031. The principal
activity of Longstone Finance plc is the issuance of commercial
mortgage-backed securities and applying the proceeds towards the secured loans
due 2031.
The Group has entered into forward starting inflation swaps to convert £126
million (2024: £155 million) from RPI-linked interest to fixed rate interest.
These transactions have been designated as cash flow hedges.
Intertrust Corporate Services Limited holds all the issued share capital of
Longstone Finance Holdings Limited on trust for charitable purposes. Longstone
Finance Holdings Limited beneficially owns all the issued share capital of
Longstone Finance plc. As the Group has no interest, power or bears any risk
over these entities they are not included in the Group consolidation.
19.2 Term loan due 2026
The Group entered into a £575 million unsecured term loan in December 2022,
with maturity of March 2026. The term loan was repaid in full in January 2025
(2 March 2024: fully drawn) and all associated interest rate swaps terminated.
19.3 Undrawn facilities
The Revolving Credit Facility of £1,000 million comprises two £500 million
facilities which were both extended by a further 12 months during the year.
This is the second extension resulting in revised maturity dates of December
2029 for Facility A and December 2028 for Facility B. As at 1 March 2025, the
Revolving Credit Facility was undrawn.
19.4 Unsecured Bond
In January 2025 the Group issued £550 million of bonds split in two tranches,
a £250 million 5-year tranche maturing June 2030 and a £300 million 10-year
tranche maturing January 2035. The bonds pay interest on the principal amount
at a rate of 5.125 per cent per annum on the 5-year tranche and 5.625 per cent
per annum on the 10-year tranche. Interest is payable in equal instalments
semi-annually in arrears.
19.5 Sainsbury's Bank Tier 2 Capital
The Group has £120 million of fixed rate reset callable subordinated Tier 2
notes in issuance (2024: £120 million), which were issued in September 2022.
These notes pay interest on the principal amount at a rate of 10.5 per cent
per annum, payable in equal instalments semi-annually in arrears, until March
2028 at which time the interest rate will reset. The Bank has the option to
redeem these notes within a six month window from 12 September 2027 to 12
March 2028.
19.6 Bank overdrafts
Bank overdrafts are repayable on demand and bear interest at a spread above
Bank of England base rate.
20 Retirement benefit obligations
20.1 Background
Retirement benefit obligations relate to the Sainsbury's Pension Scheme plus
three unfunded pension liabilities for former senior employees of Sainsbury's
and Home Retail Group.
The Sainsbury's Pension Scheme has two sections, the Sainsbury's Section,
which holds the assets and liabilities of the original Sainsbury's Pension
Scheme, and the Argos Section, which holds the assets and liabilities of the
former Home Retail Group Pension Scheme. Each section's assets are segregated
by deed and ring-fenced for the benefit of the members of that section. The
Scheme is run by a corporate trustee with nine directors.
The Scheme is also used to pay life assurance benefits to current (including
new) colleagues.
20.2 Balance sheet
The retirement benefit surplus and the associated deferred income tax balance
are shown within different line items on the face of the balance sheet.
2025 2024
Sainsbury's Argos Group Sainsbury's Argos Group
£m £m £m £m £m £m
Present value of funded obligations (4,820) (755) (5,575) (5,172) (816) (5,988)
Fair value of plan assets 5,418 911 6,329 5,777 925 6,702
Retirement benefit surplus 598 156 754 605 109 714
Present value of unfunded obligations (13) (10) (23) (14) (10) (24)
Retirement benefit surplus 585 146 731 591 99 690
Movements in net defined benefit surplus
2025 2024
Assets Obligations Net Assets Obligations Net
£m £m £m £m £m £m
As at the beginning of the financial year 6,702 (6,012) 690 6,934 (5,945) 989
Interest income/(cost) 329 (293) 36 341 (290) 51
Remeasurement (losses)/gains (448) 415 (33) (335) (54) (389)
Pension scheme expenses (8) - (8) - (7) (7)
Employer contributions 45 - 45 44 - 44
Benefits (paid)/received (291) 292 1 (282) 284 2
As at the end of the financial year 6,329 (5,598) 731 6,702 (6,012) 690
20.3 Actuarial assumptions for measuring liabilities
Principal actuarial assumptions
2025 2024
Discount rate 5.45 5.00
Inflation rate - RPI 3.15 3.20
Inflation rate - CPI 2.55 2.55
Future pension increases 1.95 - 2.95 1.95 - 3.00
a) Discount rate
The discount rate for the Scheme is derived from the expected yields on high
quality corporate bonds over the duration of the Group's pension scheme and
extrapolated in line with gilts with no theoretical growth assumptions. High
quality corporate bonds are those for which at least one of the main ratings
agencies considers to be at least AA (or equivalent).
b) Inflation
The Government's intention to amend the RPI calculation methodology to be
aligned to that already in use for the calculation of the CPI (including
housing) takes effect from 2030. As a result, the Group has assumed that RPI
will be aligned with CPI post 2030, resulting in a single weighted average
RPI-CPI gap of 0.60% p.a. up to 2030 (2024: 1.00% p.a.).
c) Mortality
The base mortality assumptions use the SAPS S2 and SAPS S3 tables for the
Sainsbury's and Argos sections, respectively, with adjustments to reflect the
Scheme's population.
Following the completion of the 2021 triennial valuation and consideration of
the previous three years of mortality experience both in the Scheme and the UK
as a whole, the Company has decided to update the actuarial mortality base
tables that determine the life expectancy assumptions to reflect a
best-estimate adjustment derived from analysis carried out for the valuation.
Future mortality improvements for the 2025 year-end are CMI 2023 projections
with a long-term rate of improvement of 1 per cent p.a. Future mortality
improvements for the 2024 year-end were CMI 2022 projections with a long-term
rate of improvement of 1 per cent p.a.
All IAS 19 calculations use the CMI model which measures potential changes to
future mortality trends. The Group's policy is to use the available version as
at the year-end which is CMI 2023 which was released in April 2024. The
calibration process for CMI 2023 differs from previous years as the CMI have
moved to a single calibration parameter which applies weighting to only the
most recent years of post-pandemic mortality experience.
As such, zero per cent weighting is applied to 2020 and 2021 data and 100%
weighting applied to 2023 data, to reflect the view that the sustained and
less volatile mortality experience provides greater evidence of a change to
future mortality trends.
The CMI has proposed significant and complex changes to CMI 2024 on which it
is currently consulting. Our advisers have reviewed the consultation working
paper and confirmed that the same mortality improvement assumption is retained
for FY25 as it remains within a reasonable range for 'best estimate' purposes.
Life expectancy at age 65
2025 2024
Sainsbury's section Main Scheme Sainsbury's section Executive Scheme Argos section Sainsbury's section Main Scheme Sainsbury's section Executive Scheme Argos section
Years Years Years Years Years Years
Members aged 65 at balance sheet date
Male pensioner 18.9 22.2 19.8 18.9 22.2 19.7
Female pensioner 22.8 23.5 22.9 22.8 23.4 22.8
Members aged 45 at balance sheet date
Male pensioner 19.9 23.1 20.7 19.8 23.1 20.7
Female pensioner 24.0 24.6 24.0 23.9 24.6 24.0
21 Contingent liabilities
The Group has a number of contingent liabilities in respect of disposed or
exited businesses and guarantees in relation to disposed assets, which may
expose the Group to a material liability. For disposed property assets, this
could be if the current tenant and their ultimate parents become insolvent. No
historical guarantees are expected to materialise.
Along with other retailers, the Group is currently subject to claims from
current and ex-employees in the Employment Tribunal for equal pay under the
Equality Act 2010 and/or the Equal Pay Act 1970. There are currently circa
17,700 equal pay claims from circa 12,100 claimants, in which the claimants
are alleging that their work within Sainsbury's stores is or was, of equal
value to that of colleagues working in Sainsbury's distribution centres, and
that differences in terms and conditions relating to pay are not objectively
justifiable. The claimants are seeking the differential back pay based on the
higher wages in distribution centres, and the equalisation of wages and terms
and conditions on an ongoing basis. The Group believes further claims will be
served.
There are three stages in the tribunal procedure for equal pay claims of this
nature and the claimants will need to succeed in all three. The first stage is
whether store claimants have the legal right to make the comparison with depot
workers. Following European and Supreme Court decisions in other similar
litigation, Sainsbury's has conceded this point. The second stage is the
lengthy process to determine whether any of the claimants' roles are of equal
value to their chosen comparators. Whilst there is at present no definitive
timetable for the litigation the Group anticipates judgment from the Tribunal
in respect of the second stage will be given in the course of 2027. This
judgment is very likely to be subject to appeal proceedings.
In the event that any of the claimants succeed at the second stage, there will
be a third stage comprising further hearings, in the following years, to
consider material factor defences relating to non-discriminatory reasons for
any pay differential. Both outstanding stages will involve contested hearings
and appeals. It is not possible to predict a final date with any
certainty.
If the Group is unsuccessful at the end of the litigation the liability could
be material but due to the complexity and multitudinous factual and legal
uncertainties, we are not in a position to predict an outcome, quantum or
impact at this stage.
Given that the outcome of the second and third stages in the litigation
remains highly uncertain at this stage, the Group cannot make any assessment
of the likelihood nor quantum of any outcome. No provision has therefore been
recognised on the Group's balance sheet. There are substantial factual and
legal defences to these claims and the Group intends to continue to defend
them vigorously.
22 Post balance sheet events
On 16 April 2025, the High Court approved the transfer of the personal loans,
credit cards and retail deposit portfolios to NatWest Group concluding the
Part VII process. Following this approval, the transaction is expected to
complete in May 2025 at which point legal title of these portfolios will
transfer from Sainsbury's Bank to NatWest Group.
Alternative performance measures (APMs)
In the reporting of financial information, the Directors use various APMs
which they believe provide additional useful information for understanding the
financial performance and financial health of the Group. These APMs should be
considered in addition to, and are not intended to be a substitute for, IFRS
measurements. As they are not defined by International Financial Reporting
Standards, they may not be directly comparable with other companies who use
similar measures.
All of the following APMs relate to the current financial year's results and
comparative financial year where provided.
A1 Income statement measures
A1.1 Revenue
a) Retail like-for-like sales (Closest IFRS equivalent: none)
Definition and purpose
Year-on-year growth in sales including VAT, excluding Fuel and Financial
Services, for stores that have been open for more than one year. The
relocation of Argos stores into Sainsbury's supermarkets are classified as new
space, while the host supermarket is classified as like-for-like.
The measure is used widely in the retail sector.
Reconciliation
2025 2024
Retail like-for-like (exc. Fuel, inc. VAT) 3.2% 7.5%
Underlying net new space impact (0.1)% (0.7)%
Retail sales growth (exc. Fuel, inc. VAT) 3.1% 6.8%
Fuel impact (1.6)% (3.6)%
Total retail sales growth (inc. Fuel, inc. VAT) 1.5% 3.2%
VAT impact 0.2% 0.4%
Total retail sales growth 1.7% 3.6%
A1.2 Profit
a) Retail underlying operating profit and margin (Closest IFRS equivalent:
Profit before tax)
Definition and purpose
Profit before interest and tax for the retail segment excluding non-underlying
items.
This is the lowest level at which the retail segment can be viewed from a
management perspective, with finance costs managed for the Group as a whole.
Reconciliation
2025 2024
Note £m £m
Retail underlying operating profit 4.1 1,036 966
Retail sales 4.1 32,630 32,084
Retail underlying operating margin 3.17% 3.01%
b) Underlying profit before tax (Closest IFRS equivalent: Profit before tax)
Definition and purpose
Profit before tax excluding non-underlying items.
Provides shareholders with additional insight into the year-on-year
performance.
Reconciliation
Face of the income statement.
Non-underlying items as set out in note 3 to the financial statements.
c) Underlying basic and diluted earnings per share (Closest IFRS equivalent:
Basic and diluted earnings per share)
Definition and purpose
Earnings per share using underlying profit as described above.
A key measure to evaluate the performance of the business and returns
generated for investors.
Reconciliation
Note 8 to the financial statements.
d) Retail underlying EBITDA (Closest IFRS equivalent: None)
Definition and purpose
Retail underlying operating profit as above, before underlying depreciation,
and amortisation.
Used to review the retail segment's profit generation and the sustainability
of ongoing capital reinvestment and finance costs.
Reconciliation
2025 2024
Note £m £m
Retail underlying operating profit 4.1 1,036 966
Add: Retail underlying depreciation and amortisation A2.1 1,156 1,112
Retail underlying EBITDA 2,192 2,078
Retail sales 4.1 32,630 32,084
Retail underlying EBITDA margin 6.72% 6.48%
e) Underlying net finance costs (Closest IFRS equivalent: Finance income less
finance costs)
Definition and purpose
Net finance costs before any non-underlying items that are recognised within
finance income / expenses.
Provides shareholders with additional insight into the underlying net finance
costs.
Reconciliation
Note 6 to the financial statements.
f) Underlying tax rate (Closest IFRS equivalent: Effective tax rate)
Definition and purpose
Tax on underlying items, divided by underlying profit before tax.
Provides an indication of the tax rate across the Group before the impact of
non-underlying items.
Reconciliation
Non-underlying tax items as set out in note 3 to the financial statements.
A2 Cash flows and borrowings
A2.1 Retail cash flows (Closest IFRS equivalent: Group cash flows)
Definition and purpose
Retail cash flows identified as a separate component of Group cash flows.
Retail free cash flow: Net cash generated from retail operations, after cash
capital expenditure and including payments of lease obligations, and cash
flows from joint ventures and associates. Excludes capital injections to,
dividends from, and any other exceptional cash movements with or on behalf of
Sainsbury's Bank and its subsidiaries. This measures cash generation, working
capital efficiency and capital expenditure of the retail business.
Other retail cash flows: Individual cash flow line items segregated from Group
cash flows to allow individual Retail cash flows to be identified. This
enables management to assess the cash generated from its core retail
operations, and to assess core retail capital expenditure in the financial
year in order to review the strategic business performance.
Reconciliation
2025 2024
(restated*)
Retail Financial Services Group Retail Financial Services Group
£m £m £m £m £m £m
Operating profit/(loss) - continuing 822 82 904 790 (46) 744
Depreciation and amortisation - Underlying 1,156 - 1,156 1,112 14 1,126
- Non-underlying 59 - 59 34 - 34
1,215 - 1,215 1,146 14 1,160
Net impairment charge/(reversal) on non-financial assets - Underlying b) 2 - 2 - - -
- Non-underlying 20 - 2 2 2 4
0 3 2 5
22 - 22 23 22 45
(Profit)/loss on sale of non-current assets and early termination of leases - Underlying b) (6) - (6) (5) - (5)
- Non-underlying (47) - ( ( - (
4 1 1
7 1 1
) ) )
(53) - (53) (16) - (16)
Non-underlying fair value movements (2) - (2) 46 - 46
Share-based payments expense b) 71 4 75 83 2 85
Defined benefit scheme expenses 8 - 8 7 - 7
Cash contributions to defined benefit scheme (45) - (45) (44) - (44)
Operating cash flows before changes in working capital 2,038 86 2,124 2,035 (8) 2,027
Movements in working capital - Underlying 98 (461) (363) 262 215 477
- Non-underlying 105 (90) 15 6 - 6
203 (551) (348) 268 215 483
Cash generated from operations - continuing a) 2,241 (465) 1,776 2,303 207 2,510
Interest paid a) (347) (12) (359) (323) (13) (336)
Corporation tax paid a) (89) 36 (53) (58) (3) (61)
1,805 (441) 1,364 1,922 191 2,113
Cash flows from investing activities - continuing
Purchase of property, plant and equipment - Additions a) (617) - (617) (649) (1) (650)
- Acquisitions c) - - - ( - (
7 7
3 3
1 1
) )
Purchase of intangible assets a) (208) - (208) (165) (13) (178)
Capital expenditure (825) - (825) (1,545) (14) (1,559)
Initial direct costs on new leases a) (34) - (34) (6) - (6)
Proceeds from disposal of property, plant and equipment - Core disposals a) 45 - 45 16 - 16
- Acquisition related c) - - - 6 - 6
1 1
Interest received a) 27 - 27 27 - 27
(787) - (787) (1,447) (14) (1,461)
Cash flows from financing activities - continuing
Proceeds from issuance of ordinary shares 20 - 20 15 - 15
Purchase of own shares for share schemes (63) - (63) (18) - (18)
Other share related transactions (43) - (43) (3) - (3)
Purchase of own shares for cancellation (200) - (200) - - -
Proceeds from borrowings 544 - 544 575 - 575
Repayment of borrowings (623) - (623) (41) - (41)
Net (repayment)/drawdown of borrowings (79) - (79) 534 - 534
Capital repayment of lease obligations a) (487) - (487) (505) (2) (507)
Dividends paid on ordinary shares (308) - (308) (306) - (306)
(1,117) - (1,117) (280) (2) (282)
Net increase/(decrease) in cash and cash equivalents - continuing operations (99) (441) (540) 195 175 370
Net (decrease)/increase in cash and cash equivalents - discontinued 2024: a) (52) 1,381 1,329 (1) 299 298
operations
(151) 940 789 194 474 668
*Comparative periods have been re-presented to separately disclose
discontinued operations. Refer to note 9 for further details.
Items in the retail cash flow marked a) to c) reconcile to the summary cash
flow statement in the financial review as outlined in note A2.2.
A2.2 Underlying retail cash flow movements (Closest IFRS equivalent: None)
Definition and purpose
Identifies cash movements in respect of Retail non-underlying items and also
sets out a breakdown of items included in the summary cash flow statement set
out in the Financial Review.
Reconciliation
2025 2024
Note £m £m
Cash contribution to defined benefit scheme A2.1 (45) (44)
Non-underlying cash movements:
Financial services model - (5)
Retail restructuring programmes (71) (67)
Operating cash flows (71) (72)
Effect on Retail cash generated from operations (116) (116)
Sum of the items marked a), b) and c) in note A2.1 as they appear in the
financial review
2025 2024
£m £m
Retail free cash flow a) 531 639
Share based payments and other b) 67 78
Net consideration paid for Highbury and Dragon property transaction c) - (670)
A3 Borrowings
A3.1 Net debt (Closest IFRS equivalent: Borrowings, cash, derivatives,
financial assets at FVOCI, lease liabilities)
Definition and purpose
Net debt includes the capital injections into Sainsbury's Bank, but excludes
the net debt of Sainsbury's Bank and its subsidiaries. Financial Services'
net debt balances are excluded because they are required as part of the
business as usual operations of a bank, as opposed to specific forms of
financing for the Group. Derivatives exclude those not used to hedge
borrowings, and borrowings exclude bank overdrafts as they are disclosed
separately. Hence net debt is represented as Retail net debt.
This metric shows the liquidity and indebtedness of the Group and whether the
Group can cover its debt commitments.
Reconciliation
Note 18 to the financial statements.
A3.2 Net debt / underlying EBITDA (Closest IFRS equivalent: None)
Definition and purpose
Net debt divided by Group underlying EBITDA.
Helps management measure the ratio of the business's debt to operational cash
flow.
Reconciliation
2025 2024
Note £m £m
Retail net debt 18 5,758 5,554
Group underlying EBITDA A4.2 2,222 2,139
Net debt/Group underlying EBITDA 2.6x 2.6x
Group underlying EBITDA is reconciled within the fixed charge cover analysis
in note A4.2.
A4 Other measures
A4.1 Return on capital employed (Closest IFRS equivalent: None)
Definition and purpose
Return divided by average capital employed.
Return is defined as 52 week rolling underlying profit before interest and
tax.
Capital employed is defined as Group net assets excluding pension surplus,
less net debt. The average is calculated on a 14-point basis which uses the
average of 14 data points.
Represents the total capital that the Group has utilised in order to generate
profits. Management use this to assess the performance of the business.
Reconciliation
2025 2024
Note £m £m
Return (Group underlying operating profit) 4.1 1,066 995
£m £m
Group net assets Balance sheet 6,651 6,868
Less: Pension surplus Balance sheet (731) (690)
Deferred tax on pension surplus 218 244
Less: Net debt 18 5,758 5,554
Effect of in-year averaging (42) 42
Capital employed 11,854 12,018
Return on capital employed 9.0% 8.3%
A4.2 Fixed charge cover (Closest IFRS equivalent: None)
Definition and purpose
Group underlying EBITDA divided by rent (representing capital and interest
repayments on leases) and underlying net finance costs, where interest on
perpetual securities is treated as an underlying finance cost. All items are
calculated on a 52 week rolling basis.
This helps assess the Group's ability to satisfy fixed financing expenses from
performance of the business.
Reconciliation
2025 2024
Note £m £m
Group underlying operating profit 4.1 1,066 995
Add: Group underlying depreciation and amortisation expense A2.1 1,156 1,144
Group underlying EBITDA 2,222 2,139
Capital repayment of lease obligations A2.1 (487) (507)
Underlying finance income 6 31 30
Underlying finance costs 6 (336) (324)
Fixed charges (792) (801)
Fixed charge cover 2.8x 2.7x
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