REG - Sainsbury(J) PLC - Preliminary Results
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RNS Number : 5664B Sainsbury(J) PLC 23 April 2026
23 April 2026
Preliminary Results for the 52 weeks ended 28 February 2026
Consistently delivering for customers, colleagues, suppliers and shareholders
Simon Roberts, Chief Executive of J Sainsbury plc, said:
"More and more customers are choosing Sainsbury's for more of their shopping,
trusting us to deliver great value day in day out. The conflict in the Middle
East means customers are even more focused on the cost of living and we are
absolutely committed to making sure everyone gets the best possible value when
they shop with us.
"By staying relentlessly focused on the things that matter most - value,
quality, availability and service - we have outperformed the market for the
sixth year in a row. Rather than pass through the full extent of cost
inflation, we invested to sustain the strength of our competitive position
while also refreshing stores, improving digital experiences and increasing
colleague pay by five per cent.
"We offer the biggest Aldi Price Match in the market, with great prices on
everyday essentials and even more value through Nectar Prices and personalised
Your Nectar Prices. Alongside our standout fresh food offer and the growing
strength of Taste the Difference, we are well placed to be first choice for
more customers.
"Long term partnerships with thousands of farmers and suppliers are key to
delivering good food at great value. We have committed to invest more than £5
billion in British and Irish farming over the coming years, making our supply
base more resilient at a time of increased challenges.
"Our balanced choices reflect a consistent long-term approach to creating
value for shareholders: strengthening our relationships with customers,
colleagues and suppliers and building a stronger Sainsbury's for the future.
"We will do everything we can to support our customers and colleagues over the
coming months, with absolute focus on keeping prices low. We have made a
positive start to the new financial year, with continued strong Grocery
momentum.
"I would like to thank all our colleagues, farmers and suppliers for their
brilliant commitment and hard work - it's their dedication that makes such a
difference for our customers every time they shop with us."
Financial Highlights
· Sainsbury's FY sales (excluding fuel) £25.9bn, up 4.9%, Argos FY
sales £4.1bn, up 0.7%, Fuel FY sales £3.6bn, down 8.2%
· Grocery sales up 5.2%, with consistently strong volume growth and
market share gains through the year
· Retail underlying operating profit £1,025m, down 1.1%,
reflecting significant operating cost inflation and investment in value in a
more competitive market. Argos profits broadly in line with last year
· Statutory profit after tax £393m, up 55.3%, primarily reflecting
lower Financial Services discontinued operations losses and restructuring
costs, with non-underlying items of £(115)m compared to £(251)m in the prior
year
· Retail free cash flow of £574m, up 8.1%, helped by strong
working capital management
· Underlying earnings per share up 3.2%, reflecting higher profit
and lower average number of shares in issue as a result of our share buyback.
Total basic earnings per share up 58.7%
· Proposed full year dividend of 13.7 pence per share, up 0.7%
Financial Summary FY 2025/26 FY 2024/25 YoY
Business performance
Retail sales (excl. VAT, excl. fuel)(1) £29,992m £28,754m 4.3%
Retail underlying operating profit £1,025m £1,036m (1.1)%
Financial Services underlying operating profit(2) £0m £(22)m 100.0%
Underlying profit before tax(2) £718m £709m 1.3%
Underlying basic earnings per share(2,3) 22.3p 21.6p 3.2%
Proposed full-year dividend per share 13.7p 13.6p 0.7%
Net debt (incl. lease liabilities)(4) £(5,743)m £(5,758)m £15m
Non-lease net debt(4) £(203)m £(264)m £61m
Return on capital employed 8.9% 9.0% (10)bps
Statutory performance
Group revenue (excl. VAT, inc. fuel)(2) £33,647m £32,772m 2.7%
Profit after tax(2,3) £393m £253m 55.3%
o/w Continuing operations £414m £421m (1.7)%
o/w Discontinued operations £(21)m £(168)m 87.5%
Total basic earnings per share(3) 17.3p 10.9p 58.7%
Net cash generated from operating activities (continuing)(2) £1,774m £802m £972m
2026/27 Outlook
We are in a strong competitive position after another year of good progress.
We have made a positive start to the new financial year, with grocery volume
growth ahead of the market. Argos trading continues to reflect a subdued
general merchandise market.
We will continue to make deliberate, balanced choices to sustain this strong
competitive position in the year ahead and expect to continue to outperform
the grocery market. The conflict in the Middle East will impact both our
customers and our business. The duration and extent of these impacts is very
uncertain and this is reflected in our profit guidance, where we currently
expect to deliver Total underlying operating profit of between £975 million
and £1,075 million. We continue to expect to deliver Retail free cash flow of
more than £500 million.
Capital Allocation
· In line with our progressive dividend policy, we paid ordinary
dividends totalling £316 million in the year and completed a core share
buyback of £200 million
· We additionally completed the disposal of our banking operations
and returned £300 million of the net proceeds to shareholders through a £250
million special dividend and £50 million incremental share buyback
· We will return an additional £100 million of the net proceeds
this year alongside a core buyback of £200 million, amounting to a total
share buyback of £300 million
Strategic Highlights
As part of the Next Level Sainsbury's plan that we set out in February 2024,
we made eight commitments:
· 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
Reflecting on our progress two years into the plan, our balanced choices
helped us make good progress against these commitments. We've invested to
support our customers, our colleagues, our farmers and our suppliers and we
have sustained our strong competitive position in an intensely competitive
market(5). More customers are trusting us to deliver our winning combination
of value, quality, availability and service. As a result, we have delivered
food volume growth ahead of the market for the sixth consecutive year,
reaching our highest volume market share in ten years(6).
The underlying profit leverage from this volume outperformance was offset by
investment in our competitive position and by unusually high levels of
operating cost inflation, only partially mitigated through the delivery of a
further £330 million of structural cost savings. We delivered Retail free
cash flow of £574 million, ahead of our expectations and we remain on track
to exceed £1.6 billion over the three-year plan. Whilst maintaining that cash
flow commitment, we are investing for future growth and to further strengthen
our competitive advantage. We have also delivered enhanced cash returns to
shareholders, with more than £800 million returned this year through
dividends and share buybacks.
Our progress against the commitments is driven by four strategic outcomes:
First choice for food, Loyalty everyone loves, More Argos, more often and Save
and invest to win.
First choice for food
In a year where we faced an unusually high level of external cost pressures
and a more competitive market, we were clear that our key objective was to
sustain our strong competitive position and that we expected to continue to
outperform the market. We delivered on this, making balanced choices
throughout the year to maintain our strong value position against all key
competitors5 and deliver volume outperformance in every quarter(7).
More and more customers are choosing us for their big weekly shop(8). We now
have around 1.2 million more big trolley primary customers than five years
ago(9) and we continue to benefit from switching gains from competitors across
the whole market(10).
Customers want to access more of our food range in more locations and we are
investing to grow our food footprint, rebalancing space towards fresh food in
existing stores and opening new stores in key target locations. At the same
time, we are going further to amplify the points of difference in our customer
proposition, with a clear focus on delivering greater personalisation,
improving the shopping experience both in-store and online and championing
fresh food and innovation.
Our brand and heritage in fresh food sets us apart and as customers
increasingly look for healthy and sustainable options, our reputation for
fresh, nutritious, high quality and well-sourced food means we are well placed
to be first choice for more customers. Our consistent delivery of great value
at the centre of the plate continues to drive outperformance versus the market
in key fresh food categories(11), supported by our continued focus on
innovation and quality.
We are using our scale, reach and capabilities to drive positive change across
the food system and are working closely with farmers and suppliers to
strengthen the supply of good food, help tackle climate, nature and labour
challenges and raise animal welfare standards. We are expanding our long-term
partnership model so that by 2027 we will be supporting more than 2,500
British and Irish farms with long-term contracts. We have committed to invest
more than £5 billion in British and Irish farming over the coming years.
c.£1.3 billion invested over the last five years to deliver consistently
great value
· Maintained strong value position against all key competitors over
the year(5)
· Unique value combination continues to resonate with customers:
biggest Aldi Price Match in the market, more than 10,000 Nectar Price offers
every week, personalised Your Nectar Prices and Nectar points offers
· Value investment focused on centre of the plate produce, dairy,
meat, fish and poultry items customers buy most often, including 17 per cent
more centre of the plate Aldi Price Match products year on year
· Delivered continued market outperformance in fresh food
categories(11). Fresh food sales up eight per cent
Taste the Difference - fastest growing Premium Own Label in the market(12)
· Taste the Difference sales ahead of £2 billion target with Fresh
food sales up 16 per cent
· More customers shopping bigger Taste the Difference baskets more
frequently(13)
· 69 per cent of customers shopped both Aldi Price Match and Taste
the Difference in the same trolley(14)
Championing good food
· More than 1,200 new Own Brand products launched during the year,
of which around 50 per cent were Taste the Difference, including our new
restaurant quality Discovery range
· Unique opportunity to support customers making healthy choices -
increasing focus on fibre and high-protein diets
· Aldi Price Match now contains at least 75 per cent healthy and
better for you products
Investing in colleagues and customer service
· Further investment in colleague wellbeing and development and pay
and benefits, increasing colleague pay by more than 40 per cent over the last
five years
· Continue to achieve high colleague engagement scores
· Consistently leading the market on overall customer satisfaction
in supermarkets(15)
· Improvements across key metrics including value for money,
product range, quality and availability(15)
Opening new stores in key target locations
· Opened ten new supermarkets, including two Co-op conversions and
three Homebase conversions
· Sales to date ahead of forecast and continue to expect strong
returns
· Additionally opened 33 new convenience stores, performing
particularly well. Sales in some standout stores more than 50 per cent ahead
of expectations
· Expect to open around ten new supermarkets in the year ahead and
at least 20 new convenience stores, adding 0.5 per cent to sales growth in
2026/27
Continued good progress with three-year 'More for More' plan
· Bringing the best of Sainsbury's to more customers through
allocating more space to food, with selective investments in 70 supermarkets
over the last two years, delivering strong results
· Customers are able to shop more of our food range, both in-store
and through our Groceries Online offer, adding an average of almost 1,000
additional food products
· Invested stores performing ahead of the rest of our store estate,
delivering two per cent food volume growth outperformance in the second half
and improving total trading intensity by more than five per cent
· Will invest in around 30 further stores in the year ahead
Delivering for customers however they want to shop with us
· Groceries Online(16) sales up 13 per cent
· Supported by growing contribution from OnDemand, with sales up 69
per cent to more than £700 million and now covering 70 per cent of the UK
population
· Improving digital journey for customers by joining up Groceries
Online, ChopChop and SmartShop apps into one coherent app, creating the
foundation for future personalisation and AI-led experiences
· Convenience store sales up three per cent, supported by
outperformance of new space and invested stores
· Improved customer satisfaction in key metrics including value for
money and product range(17), driven by reliable value through Aldi Price Match
and fresh food range expansion
Playing a leading role in creating a more sustainable food system
· Extended commitment to long-term partnerships with UK farmers,
creating one of the UK's most extensive networks of multi-year farming
agreements
· 60 per cent(18) of own brand produce, meat, fish, dairy and
poultry products in long-term agreements with more than 2,500 British and
Irish farms supported by long-term contracts by early 2027
Campaigning for good food for everyone so that no child or family goes hungry
· Raised more than £26 million since 2022 in partnership with
Comic Relief. Over 60 million meals donated and support provided to over two
million people
· Almost doubled the tonnage of edible surplus food being donated
to local communities, preventing 11,030 tonnes of surplus food going to waste,
a 49 per cent increase year-on-year
Refreshed Plan for Better commitments for packaging and human rights
· New packaging targets reflect rapid regulatory and structural
change in UK packaging sector, focusing our efforts on recyclability of
materials to help improve circularity
· Refreshed Human Rights Policy and Saliency Assessment and
delivered training to over 100 colleagues and over 700 supplier
representatives to help increase awareness of human rights risks and
strengthen due diligence
· New international programme with Comic Relief to proactively help
strengthen climate adaptation, food security and resilience in key sourcing
regions that are highly vulnerable to climate impacts
Strong growth and market outperformance in Tu Clothing(19)
· Elevated style credentials(20) and stronger availability delivers
six per cent Tu Clothing volume growth
· Clothing sales up 4.8 per cent, with very strong Spring Summer
offset by unseasonal second half weather
· Outperformed Clothing market for seven consecutive quarters(19),
with online sales growth of more than 20 per cent
Streamlining Sainsbury's General Merchandise
· Sainsbury's General Merchandise sales down 3.2 per cent,
primarily reflecting expected volume decline driven by strategic choice to
allocate more space to food
· Strong progress in streamlining General Merchandise reflecting
market-driven shift of discretionary spend towards lower-priced categories
· Easier-to-shop customer offer with better everyday value and
product availability
· Delivering higher trading intensity at a lower cost to serve -
simpler store, supplier and supply chain operations
Smart Charge customer proposition improvements drive sales growth of 136 per
cent
· Five new locations - 661 ultra-rapid electric vehicle charging
bays now available in 80 stores
· Sales increase primarily driven by very strong like for like
growth. More and more customers shopping with Sainsbury's whilst they charge,
shopping with us more often and benefiting from using Nectar with Smart Charge
Loyalty everyone loves
Customers can save more than £450 a year with Nectar, as well as collecting
over £170 of Nectar Points through our well-established value proposition of
Nectar Prices, personalised Your Nectar Prices, Nectar Offers and Nectar
Points earned across a coalition of partners. Nectar participation has reached
its highest ever level, with digital engagement strengthening in particular,
as customers recognise the benefits of personalised, rewarding and integrated
loyalty and value when they shop at Sainsbury's.
The resulting growth of our loyal, primary customer base is central to the
success of the Nectar360 Retail Media business, which now supports over 900
clients and media agencies. We are increasingly well placed to capitalise on
the strong forecast growth of Retail Media in the UK through the
high-returning investments we are making in our capabilities. We remain ahead
of plan to deliver at least £100 million of incremental profit over the three
years to March 2027.
Nectar transforming the way that customers experience value. Further ambitions
for the year ahead
· Customers saved an average of £15.50 on an £80+ big weekly shop
with Nectar Prices during 2025/26
· Nectar Prices has delivered more than £5.5 billion savings for
customers since April 2023 launch
· Your Nectar Prices now rolled out to cover all supermarket
checkouts - previously only available using Online and SmartShop
· Key driver of record Nectar digital engagement with 35 per cent
increase in digitally active users(21)
Setting the standard in Retail Media and Loyalty services
· Brands want to work with fewer, higher-quality networks. We are a
partner of choice with a reputation for scaled first-party data, omnichannel
reach, sophisticated closed-loop measurement capabilities and leading client
service
· Launched Nectar360 Pollen in the Autumn, the UK's most advanced
unified Retail Media platform, connecting audience insight, planning,
activation, optimisation and measurement in a single, easy-to-use platform
that facilitates omnichannel advertising in-store, onsite and offsite
· Underway with client onboarding particularly amongst our largest
grocery suppliers with excellent early feedback on the intuitive and
forward-thinking nature of the platform, the benefit of real-time audience
building AI tools, efficiency gains from more streamlined creative compliance
process and market-leading measurement tools which enable clearer ROI tracking
and smarter decision making
Growing Nectar network, capabilities and Coalition
· Connected digital screen network now almost 3,000 screens across
supermarkets and convenience stores. Plans to install a further 3,000 screens
during the next year
· Continuing to develop our Retail Media capabilities, including
exploring further opportunities within SmartShop
· Growing the Nectar Coalition, launched partnerships with Marriott
Bonvoy, FareShare and Deliveroo and reward partnerships with Uber and Uber
Eats
More Argos, more often
We have taken determined action to accelerate the transformation of Argos,
balancing our objective to improve the customer proposition with structural
cost reduction and greater efficiency in our supply chain.
We continue to invest in strategic initiatives to strengthen choice,
availability and service for customers and to build a stronger digital
proposition, as well as recently launching a new, more flexible, financial
services offer, Argos Pay. Customer satisfaction regarding value and range(22)
and brand consideration have improved(23) and have helped deliver growth in
customer numbers and volumes. In a highly competitive and subdued general
merchandise market, volume growth was largely offset by pricing pressure and
higher participation of lower ticket items.
We have established a dedicated Argos management team to help accelerate the
pace of change and drive cost reduction, supporting investments in
infrastructure and technology platforms for Argos.
Encouraging volume performance offset by lower average selling price
· Argos sales increased by 0.7 per cent in a highly competitive
market
· Strong summer performance offset by subdued consumer spending
over peak Black Friday and Christmas period
· Sales volumes up 3.7 per cent, driven by higher customer
numbers and bigger baskets
· Largely offset by average selling price (ASP) down 3.0 per
cent, reflecting competitive pricing pressure and higher participation of
lower ticket items
· Profits broadly in line with last year. Benefit from higher
volumes and operating cost savings offset by lower ASP, higher cost of driving
online traffic and higher wage inflation
· Profits up year on year in first half, reflecting strong Summer
seasonal volume growth, but down in peak third quarter, impacted by lower ASP
Expanding breadth and depth of ranges
· Added 13,000 new Supplier Direct Fulfilled products, with
particular focus on Beauty, Toys and Electricals, driving strong sales growth
· Launch of marketplace in the year ahead will significantly
expand choice for customers
· Rationalising Argos-owned private label brands from 27 to seven
core brands, revitalising our own brand offer
· Re-launched Chad Valley and design-led collaborations in
Habitat resulted in positive market share performances in both toys and
homewares(24). 21 per cent improvement in sales growth in Chad Valley
post-launch
Focus on efficiency, strengthening digital capabilities and added value
services
· Significant cost savings delivered in stores, depots and
warehouses
· Investments in AI and automation improving vehicle routing,
stock management and customer targeting
· Streamlining and modernising stores - right sizing standalone
stores, improving signage and technology in our stores inside Sainsbury's and
opening new collection points
· Improving Argos app to deliver personalised recommendations and
app-only offers, smoother account set up and purchasing journey
· Supporting higher conversion and increased visits in a highly
competitive digital market, with a 24 per cent increase in app visits
year-on-year
· Launched Argos Pay, flexible credit solution, in partnership
with NewDay
Save and invest to win
As we enter the third and final year of our Next Level plan, we remain on
track to deliver our £1 billion cost saving target, having delivered around
£680 million of cost savings since February 2024 and a total of nearly £2
billion over the past five years.
Our cost savings programme helped us sustain the strength of our competitive
position in a year in which we navigated high levels of operating cost
inflation, including significantly higher National Insurance costs and the
introduction of the Extended Producer Responsibility scheme. We continue to
invest to improve colleague safety, enhance loss prevention measures and
accelerate the use of technology to drive efficiency, resilience and
sustainable long‑term value creation.
Improving productivity through high-returning technology and automation
· SmartShop extended to another 100 stores and now available in
the majority of supermarkets. Driving operational efficiency and supporting
bigger basket trolley shops
· Introduced enhanced features such as Product Finder on
colleague and customer handsets, supporting easier navigation, faster missions
and improved in‑store flow
· All food products now live on machine learning forecasting
platform, now a core component of availability and inventory management.
Contributing to highest food availability since start of Food First strategy
and reduced waste
· AI Centre of Excellence launched to drive responsible scalable
and value-led adoption of AI across the business
· AI tools improving colleague productivity, customer service and
supply chain optimisation and enabling colleagues to focus more time on
customer‑facing and value‑adding work
· Continuing to build digital capabilities in stores,
accelerating testing and adoption of new technologies for customers and
colleagues
Enhancing colleague and customer safety and strengthening loss prevention
across our stores
· Targeted, data‑led approach to strengthening safety, building
operational resilience and improving loss prevention
· Completed trial of facial recognition technology with Facewatch
in two stores to improve colleague safety and support identification of repeat
serious offenders
· Early results show almost 50 per cent reduction in logged
incidents and over 90 per cent of identified offenders not returning.
Technology extended to five additional London stores to assess performance
when adopted by multiple stores in the same area, with plans to introduce the
technology in more stores nationwide
· Continued investment in targeted shrink measures. Self-checkout
video analytics rolled out to more than 440 supermarkets, with 130 more
planned by the end of June
· Enhanced shelf-edge protection safeguarding for higher risk
items is now live in over 800 convenience stores, alongside selective use of
front-of-store barriers
Simplifying the business and delivering sustainable cost savings
· Remaining in-store cafes, hot food, pizza and patisserie
counters and scratch bakery operations closed, reallocating 170,000 sq ft of
store space to improved food ranges and delivering nearly £50 million of cost
savings
· First year to fully benefit from change to using third party
warehousing and transport suppliers for logistics operations, delivering
nearly £30 million of productivity savings
· Continued logistics automation progress, including Argos
operations at Daventry warehouse
· Automated mobile robots now also live at Northampton site,
simplifying ambient grocery picking process, driving efficiency and increasing
capacity, with potential for rollout across the wider network
Financial Services
We are creating a simpler, more focused Financial Services model, fully
integrated into our retail business. As a result, following completion of the
exit from core banking, Financial Services will no longer be reported as a
separate operating segment. The ongoing Financial Services contribution will
be generated from Argos Care, commission income from Insurance, Travel Money,
ATMs and white label banking products, alongside income from the NewDay Argos
Pay partnership.
· Continue to make good progress on plan to exit core banking
services and streamline Financial Services proposition:
o June 2024: Announced sale of Sainsbury's Bank personal loan, credit card
and retail deposit portfolios to NatWest Group. Successful migration completed
across October and November 2025
o September 2024: Announced sale of Bank ATM business to NoteMachine.
Completed May 2025
o October 2024: Announced sales of Argos store card portfolio to NewDay and
launch of new partnership to create Argos-branded digital credit proposition.
Went live in February 2026. Migration of existing customers will complete in
2026/27
o July 2025: Announced agreement with Allianz UK on car and home insurance.
Completed August 2025
o July 2025: Agreed sale of Travel Money business to Fexco Group. Completed
January 2026
o April 2026: Announced new partnership with NatWest, providing loans,
savings products and new NatWest Nectar credit card. Products expected to be
available in second half of 2026
o Expect to complete final stage of bank exit and surrender banking license
by July 2026
· Net proceeds from the bank exit enabled return of £300 million
to shareholders, with further £100 million to be returned via incremental
share buybacks in 2026/27
· Breakeven continuing operating profit outcome a £22 million
improvement versus prior year, supported by cost reduction measures and
effective treasury management
Sales performance (excl. VAT)
Like-for-like sales performance 2024/25 2025/26
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY
Like-for-like sales (excl. fuel) 2.9% 4.3% 2.9% 4.0% 4.6% 4.3% 3.4% 3.1% 3.9%
Like-for-like sales (incl. fuel) 2.6% 2.2% 0.3% 2.6% 2.2% 2.8% 2.9% 1.5% 2.5%
Total sales performance 2024/25 2025/26
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY
Sainsbury's 4.3% 5.2% 3.8% 4.2% 4.9% 5.5% 4.9% 4.3% 4.9%
Grocery 4.9% 5.5% 4.2% 4.1% 5.0% 5.7% 5.4% 4.5% 5.2%
GM (Sainsbury's) & Clothing (4.5)% 2.0% (0.4)% 6.4% 4.2% 2.1% (1.1)% 1.0% 1.3%
Argos (7.7)% (1.4)% (1.4)% 1.9% 4.0% 0.1% (1.0)% 0.2% 0.7%
Total Retail (excl. fuel) 2.6% 4.3% 2.9% 3.9% 4.8% 4.8% 3.9% 3.8% 4.3%
Fuel(25) 0.4% (10.6)% (17.4)% (6.8)% (13.6)% (7.8)% (1.2)% (10.1)% (8.2)%
Total Retail (incl. fuel) 2.3% 2.2% 0.3% 2.5% 2.4% 3.2% 3.4% 2.1% 2.8%
Total sales performance (£m) 2024/25 2025/26
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY
Sainsbury's 7,431 5,497 8,040 3,690 7,797 5,799 8,431 3,848 25,875
Grocery 6,995 5,155 7,426 3,484 7,342 5,450 7,824 3,640 24,256
GM (Sainsbury's) & Clothing 436 342 614 206 455 349 607 208 1,619
Argos 1,077 860 1,611 548 1,120 861 1,595 549 4,125
Total Retail (excl. fuel) 8,508 6,357 9,651 4,238 8,915(1) 6,659(1) 10,022(1) 4,396 29,992
Fuel(25) 1,291 894 1,116 575 1,115 824 1,103 517 3,559
Total Retail (incl. fuel) 9,799 7,251 10,767 4,813 10,030(1) 7,483(1) 11,125(1) 4,913 33,551
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 9:30 (BST). This will
be available to view on our website at the following link:
https://sainsburys-preliminary-results-announcement-2026.open-exchange.net/
(https://sainsburys-preliminary-results-announcement-2026.open-exchange.net/)
A recorded copy of the webcast and Q&A call, alongside slides and a
transcript of the presentation will be available at
https://corporate.sainsburys.co.uk/investors/results-reports-and-presentations/
(https://corporate.sainsburys.co.uk/investors/results-reports-and-presentations/)
following the event.
Sainsbury's will issue its 2026/27 First Quarter Trading Statement at 07:00
(BST) on 30 June 2026.
Enquiries
Investor Relations Media
James Collins Rebecca Reilly
+44 (0) 7801 813 074 +44 (0) 20 7695 7295
LEI: 213800VGZAAJIKJ9Y484
( )
(1) Total Retail sales are reported after the elimination of intra-segmental
revenues
(2) Discontinued operations were previously included in underlying measures whilst
the associated trading activities remained ongoing. Following completion of
the NatWest, NewDay and NoteMachine disposals, these activities are
substantially ceased and have therefore been reclassified to non-underlying so
as to only reflect ongoing trading performance within underlying results. In
July 2025, we agreed the sale of the Travel Money business to Fexco Group,
with the sale completing in January 2026. The Travel Money business is
presented as a discontinued operation in both the current and comparative
periods.
(3) The comparative period has been restated to reflect the deferred tax impact of
an increased proportion of assets qualifying for tax allowances. Further
details can be found on note 2.
(4) Net debt is defined as Retail net debt. Refer to note A3.1 within Alternative
Performance Measures.
(5) Value Reality, February 2026 vs February 2025; Acuity, internal modelling
(6) Worldpanel by Numerator Panel (Kantar), Universe: City read Grocery, Volume
market share, 2016/17 to 2025/26, 52 weeks to 1 March 2026
(7) Worldpanel by Numerator Panel (Kantar), Total FMCG excl. Kiosk & Tobacco,
Volume growth YoY, Total Market and Sainsbury's, 2025/26 quarters
(8) Worldpanel by Numerator Panel (Kantar), Total Fresh & Grocery excl. Kiosk
& Tobacco, Main Shop Buyers, 52 weeks to 1 March 2026
(9) Worldpanel by Numerator Panel (Kantar), Total Fresh & Grocery excl. Kiosk
& Tobacco, Primary shopper number growth (actual) 2020/21 to 2025/26, 52
weeks to 22 February 2026. Primary shopper is defined as any shopper who
bought 40% or more of their groceries at particular retailer within the time
period indicated
(10) Worldpanel by Numerator Panel (Kantar), Total Fresh & Grocery excl. Kiosk
& Tobacco, Retailer to/from Volume net switching gains/losses, 52 weeks to
22 February 2026
(11) NielsenIQ EPOS, Total FMCG excl. Kiosk & Tobacco, Fresh categories
(Sainsburys defined category hierarchy) volume growth YoY, 52 weeks to 28
February 2026
(12) Worldpanel by Numerator Panel (Kantar), Total Fresh & Grocery excl. Kiosk
& Tobacco, Premium Own Label tier (excl. Premium Plus tier), Volume growth
YoY, 52 weeks to 1 March 2026
(13) Worldpanel by Numerator Panel (Kantar), Total Fresh & Grocery excl. Kiosk,
Premium Own Label tier (excl. Premium Plus tier), Basket size - number of
Taste the Difference items per basket, Frequency and Buyers YoY growth, 52
weeks to 1(st) March 2026
(14) Nectar / Groceries Online customers shopping both Aldi Price Match and Taste
the Difference at least once during 2025/26
(15) CSAT Supermarket Competitor Benchmarking data - Overall Supermarket
Satisfaction 2025/26 vs full-choice grocers and 2025/26 vs 2024/25
year-on-year improvement in key metrics: value for money, product range,
quality and availability. Note: March 2025 data unavailable
(16) Groceries Online includes sales through Sainsburys.co.uk and sales through
OnDemand channels serviced by supermarket and convenience locations
(17) CSAT Convenience Competitor Benchmarking data -2025/26 vs 2024/25 year-on-year
improvement in key metrics: value for money and product range. Note: March
2025 data unavailable
(18) Based on Cost Of Goods Sold (COGS) from suppliers (Dairy, Meat, Fish,
Poultry, Produce) with minimum five year long-term agreements in place or
planned, divided by total COGS of these categories
(19) Worldpanel by Numerator Panel (Kantar), Total Clothing, Footwear and
Accessories. YoY retailer spend growth vs the market - from 12 weeks to 23
June 2024 to 12 weeks to 1 March 2026
(20) Brand Tracking - Style (H2 2025/26 vs H2 2024/25)
(21) Increase in digitally active Nectar users February 2026 vs February 2025
(22) Argos CSAT Survey - value for money and product range - February 2025/26 vs
February 2024/25
(23) YouGov Brand Tracking - Consideration - YoY improvement, 2025/26 vs 2024/25
(24) GFK (Home) & Circana (Toys) market share data, 12 months to the end of
February 2026
(25) Fuel sales represent sales of fuel from our Petrol Filling Stations (PFS) and
sales from our Ultra Rapid Electric Vehicle charging business, Smart Charge
Financial review
"We delivered a resilient operating profit performance despite significant
cost inflation, whilst generating strong free cash flow and returning more
than £800 million to shareholders."
We made balanced choices in the year to maintain the strength of our
competitive position, delivering consistently strong volume growth and a
resilient operating profit outcome, despite a high level of externally driven
operating cost inflation in a more competitive market. We continued our
relentless focus on cash, generating strong cash flows which reflected
disciplined capital investment and robust working capital management. Together
with the partial return of proceeds from the exit of our Financial Services
businesses, this allowed us to return £816 million of cash to shareholders
through dividends and share buybacks.
Underlying measures are reconciled to IFRS on the income statement, with
further detail in note 3. Other APMs are set out in notes A1 to A4.
Summary income statement 52 weeks to 52 weeks to Change
28 February 2026 1 March 2025 %
£m £m
Underlying Group sales (excluding VAT) 33,647 32,772 2.7
Underlying operating profit
Retail 1,025 1,036 (1.1)
Financial Services - (22) 100.0
Total underlying operating profit 1,025 1,014 1.1
Underlying net finance costs (307) (305) (0.7)
Underlying profit before tax 718 709 1.3
Items excluded from underlying results (99) (102) 2.9
Profit before tax 619 607 2.0
Income tax expense (205) (186) (10.2)
Profit after tax - continuing operations 414 421 (1.7)
Loss after tax - discontinued operations (21) (168) 87.5
Profit for the financial period 393 253 55.3
Underlying basic earnings per share 22.3p 21.6p 3.2
Basic earnings per share 17.3p 10.9p 58.7
Interim dividend per share 4.1p 3.9p 5.1
Final dividend per share 9.6p 9.7p (1.0)
Total dividend per share 13.7p 13.6p 0.7
Special dividend per share 11.0p - -
Discontinued operations were previously included in underlying measures whilst
the associated trading activities remained ongoing. Following completion of
the NatWest, NewDay and NoteMachine disposals, these activities are
substantially ceased and have therefore been reclassified to non-underlying so
as to only reflect ongoing trading performance within underlying results. In
July 2025, we agreed the sale of the Travel Money business to Fexco Group,
with the sale completing in January 2026. The Travel Money business is
presented as a discontinued operation in both the current and comparative
periods. Further details can be found in note 2.1.
Note that the comparative period has been restated to reflect the deferred tax
impact of an increased proportion of assets qualifying for tax allowances.
Further details can be found in note 2.1.
Group sales
Group sales (excluding VAT) increased by 2.7 per cent year-on-year, with a 4.3
per cent increase in retail sales (excluding VAT, excluding fuel) offset by an
8.2 per cent decrease in fuel sales (excluding VAT).
Total sales (excluding VAT) performance by category 52 weeks to 52 weeks to Change
28 February 2026 1 March 2025 %
£m £m
Sainsbury's 25,875 24,658 4.9
Grocery 24,256 23,060 5.2
General merchandise (Sainsbury's) and clothing 1,619 1,598 1.3
Argos 4,125 4,096 0.7
Retail (excl. fuel)(a)) 29,992 28,754 4.3
Fuel sales (b)) 3,559 3,876 (8.2)
Retail (incl. fuel) 33,551 32,630 2.8
Financial Services 96 142 (32.4)
Group sales 33,647 32,772 2.7
a) Total Retail sales are reported after the elimination of intra-segmental
revenues.
b) Fuel sales represent sales of fuel from our Petrol Filling Stations (PFS) and
sales from our Ultra Rapid Electric Vehicle charging business, Smart Charge.
Retail like-for-like sales performance 52 weeks to 52 weeks to
28 February 2026 1 March 2025
Like-for-like sales (excl. fuel) 3.9% 3.4%
Like-for-like sales (incl. fuel) 2.5% 1.8%
Grocery sales increased by 5.2 per cent, reflecting both inflation and
consistently strong volume growth, outperforming the market. Customers
continue to respond positively to the strength of our grocery proposition,
including the ongoing innovation across our Taste the Difference range and
value driven through Nectar Prices, Aldi Price Match and Your Nectar Prices.
These propositions are helping to attract and retain more big basket primary
customers.
General Merchandise and Clothing sales in Sainsbury's stores were up 1.3 per
cent, with clothing delivering a particularly strong performance.
Childrenswear led the growth, supported by improved ranges across essentials
and womenswear and a strongest ever back to school event. This was partially
offset by lower general merchandise sales, reflecting a deliberate reduction
of store space allocated to general merchandise categories in favour of food
and a focus on lower priced everyday general merchandise items.
Argos sales increased by 0.7 per cent, driven by volume growth. Average
selling price decreased, reflecting a highly competitive market with higher
participation of lower ticket items.
Fuel sales decreased by 8.2 per cent as a result of reduced demand and lower
forecourt prices. This was partly offset by our Ultra Rapid Electric Vehicle
(EV) charging business, where performance continued to strengthen. We added
five new EV sites during the year, bringing our total to 80 locations with 661
ultra-rapid charging bays.
Total sales growth (excluding VAT) performance by channel 52 weeks to 52 weeks to
28 February 2026 1 March 2025
% %
Supermarkets (incl. Argos stores in Sainsbury's) 3.1 3.3
Groceries Online (incl. OnDemand) (a)) 13.3 12.2
Convenience 3.0 1.9
a) Groceries Online includes sales through Sainsburys.co.uk and sales through
OnDemand channels serviced by supermarket and convenience locations.
Sales in our supermarkets increased 3.1 per cent. We have continued to
reallocate space in our supermarkets to increase our food offer; giving
customers greater choice from a broader range, particularly in fresh food.
Groceries Online sales grew by 13.3 per cent, driven by very strong OnDemand
growth, higher order numbers, larger average basket sizes, stronger
availability and increased household coverage.
Convenience sales grew 3.0 per cent, supported by new store openings and
improved layouts across our estate, ensuring ranges are better tailored to its
customers' needs.
Retail underlying operating profit
Note a) 52 weeks to 52 weeks to Change
28 February 2026 1 March 2025
Retail underlying EBITDA (£m) A1.2 b) 2,211 2,192 0.9%
Retail underlying EBITDA margin (excl. VAT) (%) A1.2 b) 6.59 6.72 (13)bps
Retail underlying operating profit (£m) A1.2 b) 1,025 1,036 (1.1)%
Retail underlying operating margin (excl. VAT) (%) A1.2 b) 3.06 3.17 (11)bps
a) Note references for reconciliations refer to the Alternative Performance
Measures.
Retail underlying EBITDA increased to £2,211 million (2024/25: £2,192
million), with Retail underlying EBITDA margin decreasing to 6.59 per cent
(2024/25: 6.72 per cent). This reflects strong volume growth in Sainsbury's
and ongoing cost efficiencies, partly offset by significant operating cost
inflation alongside continued investment in colleagues and sustained price
investment to deliver value.
Retail underlying operating profit decreased by 1.1 per cent to £1,025
million (2024/25: £1,036 million) and Retail underlying operating margin
decreased to 3.06 per cent (2024/25: 3.17 per cent). Retail underlying EBITDA
increased while Retail underlying operating profit decreased due to higher
depreciation year-on-year.
In 2026/27, we expect a Retail underlying depreciation and amortisation charge
of around £1.2 billion (2025/26: £1.2 billion), including £0.5 billion
right-of-use asset depreciation.
We expect to deliver Total underlying operating profit of between £975 and
£1,075 million in 2026/27.
Space
Store numbers and retailing space As at New stores Disposals/ Re-classifications/ extensions As at
1 March 2025 closures 28 February 2026
Supermarkets 599 10 - - 609
Supermarkets area '000 sq ft 20,930 163 - 46 21,139
Convenience 855 33 (3) - 885
Convenience area '000 sq ft 2,054 78 (13) 1 2,120
Sainsbury's total store numbers 1,454 43 (3) - 1,494
Argos stores 203 1 (3) - 201
Argos stores in Sainsbury's 461 5 - - 466
Argos total store numbers 664 6 (3) - 667
Argos collection points 443 31 (8) - 466
During the year, we opened ten new supermarkets (including two Co-Op
conversions and three Homebase conversions) and 33 new convenience stores. We
opened one new standalone Argos store, five new Argos stores in Sainsbury's
and 31 new collection points.
As at 28 February 2026, Argos had 201 standalone stores, 466 stores in
Sainsbury's and 466 collection points, giving a total of 1,133 points of
presence.
Subject to final planning consent, we expect to open around ten supermarkets
in 2026/27, complementing our existing organic supermarket growth pipeline. In
addition, we expect to open around 20 more convenience stores. Overall, we
expect a net space growth impact on retail sales of around 0.5 per cent in
2026/27.
Financial Services
During the year we successfully completed the sale and migration of our Core
Banking Products, migrated the ATM business and sold our Travel Money
operations. Together with the previously sold Argos Financial Service and
Mortgage businesses, these divestments have been classified as discontinued
operations and are now reported as items excluded from underlying results.
Together they form part of the single, co-ordinated strategy to transition
towards a distributed financial services model which was announced in January
2024. The prior year has been restated to reflect this.
We also completed the sale of our Car and Home Insurance businesses. These
continue to be reported within continuing operations as we still earn
commission income, alongside our wider insurance offering across Pet, Life and
Travel.
2026 2025 Change
£m £m %
Underlying revenue 96 142 (32.4)
Underlying operating profit / (loss) - (22) 100.0
Financial Services underlying revenue decreased by 32.4 per cent, primarily
due to reduced treasury assets interest, linked to the strategic exit from
core banking services.
Underlying operating loss decreased by £22 million to break-even, reflecting
reduced wholesale funding and deposit platform cost as we move to a
distributed Financial Services model.
Following completion of the exit from core banking, Financial Services will no
longer be reported as a separate operating segment. The ongoing Financial
Services contribution will be generated from Argos Care, commission income
from Insurance, Travel Money, ATMs and white label banking products, alongside
income from the NewDay Argos Pay partnership.
Underlying net finance costs
52 weeks to 52 weeks to Change
28 February 2026 1 March 2025 %
£m £m
Non-lease interest costs (64) (76) 15.8
Non-lease interest income 23 29 (20.7)
Net finance costs on lease liabilities (266) (258) (3.1)
Total underlying net finance costs (307) (305) (0.7)
Underlying net finance costs increased slightly to £307 million (2024/25:
£305 million). This includes £41 million of net non-lease cost (2024/25:
£47 million); with the reduction primarily driven by lower interest costs
incurred on our inflation-linked amortising loan due in 2031. This was partly
offset by a decline in interest income, driven by lower interest rates.
Net financing costs on lease liabilities rose to £266 million (2024/25: £258
million), reflecting higher costs associated with equipment leases and
property regears and rent reviews, which increased lease liabilities.
We expect underlying net finance costs in 2026/27 to be around £320 million.
Items excluded from underlying results before tax
Note 52 weeks to 52 weeks to
28 February 2026 1 March 2025
£m £m
Continuing operations:
Retail restructuring programmes (74) (128)
IAS 19 pension income 33 28
Other (50) 14
Financial Services phased withdrawal (8) (16)
Items excluded from underlying results - continuing operations 3 (99) (102)
Discontinued operations:
Financial Services phased withdrawal
(41)
8.1 (82)
Financial Services gain/(loss) on disposal 8.2 12 (141)
Items excluded from underlying results - discontinued operations (29) (223)
Total items excluded from underlying results (128) (325)
Items recognised in reported profit before tax which, by virtue of their size
and/or nature, do not reflect the underlying performance are excluded from the
underlying results and shown in the table above.
We recognised retail restructuring programme costs of £74 million in the
year, with £41 million associated with the Sainsbury's Next Level strategy,
launched in February 2024. These Next Level Sainsbury's strategy costs include
redundancy costs associated with updating our central management structures
and costs associated with the closures of food counters and conversions of
cafes and bakeries.
Other items include £17 million of brand amortisation, £8 million of
non‑underlying finance costs, a £7 million loss on fair value movements on
fixed‑price power purchase arrangements and a £2 million loss on
property‑related transactions. Other costs also include impairment of
non‑trading sites, reflecting rent reviews at these sites, and consultancy
costs relating to corporate transaction activity, partially offset by income
from a legal case relating to European truck manufacturers. In the prior year,
other items included £57 million of gains on property‑related transactions,
predominantly driven by the completion of the Hendon mixed‑use development
site, together with a £2 million gain on fair value movements on
fixed‑price power purchase arrangements, offset by £17 million of brand
amortisation and £12 million of non‑underlying finance costs.
Discontinued operations consist of phased withdrawal which includes pre-tax
operating loss of £16 million as well as restructuring costs and impairment
of £25 million. A pre-tax gain on disposal of £12 million was recognised in
relation to Financial Services.
Taxation
The tax charge for continued operations is £205 million (restated 2024/25:
£186 million). The underlying tax rate was 29.2 per cent (restated 2024/25:
28.9 per cent) and the effective tax rate was 33.1 per cent (restated 2024/25:
30.6 per cent).
The underlying tax rate for the year is higher than the headline corporation
tax rate of 25 per cent primarily due to the impact of depreciation on assets
which do not qualify for capital allowances.
We expect the underlying tax rate in 2026/27 to remain at around 29 per cent.
This rate is expected to be higher than the standard rate of corporation tax
due to the ongoing impact of depreciation on assets which do not qualify for
capital allowances.
Note that the comparative period has been restated to incorporate the deferred
tax impact arising from a misclassification of assets between those impacting
deferred tax and those which do not, and an omission of the tax effects of
prior year impairments and disposals. As a result, deferred tax now reflects
an increase in the proportion of depreciation relating to assets qualifying
for tax allowances. Further details can be found in note 2.1.
Earnings per share
Statutory and underlying basic and diluted EPS increased, driven by higher
earnings and a reduction in the weighted average number of shares as a result
of the share buyback programme. Statutory basic EPS increased to 17.3 pence
(restated 2024/25: 10.9 pence) and diluted EPS to 16.9 pence (restated
2024/25: 10.7 pence). Underlying basic EPS increased to 22.3 pence (restated
2024/25: 21.6 pence), while underlying diluted EPS increased to 21.9 pence
(restated 2024/25: 21.2 pence).
Dividends and share buyback
The Board has recommended a final dividend of 9.6 pence per share (2024/25:
9.7 pence). This will be paid on 10 July 2026 to shareholders on the Register
of Members at the close of business on 5 June 2026. In line with the policy to
pay a progressive dividend, the proposed full-year dividend is 13.7 pence per
share, an increase of 0.7 per cent (2024/25: 13.6 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 19 June 2026.
In 2025/26, we completed a £250 million share buyback programme, comprised of
a £200 million core buyback and a £50 million incremental buyback to return
bank disposal proceeds. We also paid a special dividend of £250 million (11.0
pence per share), with a total of £300 million of bank disposal proceeds
returned to shareholders during the year. For the financial year 2026/27 we
will buy back £300 million of shares, including a £200 million core buyback
and an additional return of £100 million of net bank disposal proceeds. 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 (a)) Note 52 weeks to 52 weeks to
28 February 2026 1 March 2025
£m £m
Retail underlying operating profit 1,025 1,036
Adjustments for:
Retail underlying depreciation and amortisation 1,186 1,156
Share-based payments and other 81 67
Adjusted Retail underlying operating cash flow before changes in working 2,292 2,259
capital
Decrease in underlying working capital 128 98
Retail non-underlying operating cash flows (excluding pensions) (80) (71)
Pension cash contributions (27) (45)
Retail cash generated from operations 2,313 2,241
Interest paid (336) (347)
Corporation tax paid (112) (89)
Retail net cash generated from operating activities 1,865 1,805
Cash capital expenditure (843) (825)
Repayments of lease liabilities (504) (487)
Initial direct costs on right-of-use assets (8) (34)
Proceeds from disposal of property, plant and equipment 41 45
Interest income 23 27
Retail free cash flow 574 531
Dividends paid on ordinary shares (316) (308)
Special dividend paid (250) -
Purchase of own shares - share buyback (251) (200)
Net repayment of borrowings (59) (79)
Other share-related transactions (37) (43)
Dividend received from Sainsbury's Bank 400 -
Financial Services strategic review (59) (52)
Net increase/(decrease) in cash and cash equivalents 2 (151)
Decrease in debt 563 566
Other non-cash and net interest movements b) (550) (619)
Movement in net debt 18 15 (204)
Opening net debt 18 (5,758) (5,554)
Closing net debt 18 (5,743) (5,758)
Of which:
Lease liabilities 18 (5,540) (5,494)
Net debt excluding lease liabilities (203) (264)
a) For reconciliation refer to Alternative Performance Measures in notes A2.1 and
A2.2. Net debt is defined as Retail net debt. Refer to note A3.1.
b) Other non-cash movements relate to new leases and lease modifications, foreign
exchange, the cancellation of own shares once purchased and fair value
adjustments relating to derivatives.
Retail free cash flow increased by £43 million year-on-year to £574 million
(2024/25: £531 million), driven by improved working capital inflow and higher
underlying EBITDA. We have generated £1.1 billion of Retail free cash flow
over the last two years and we expect to generate more than £500 million of
Retail free cash flow in 2026/27, in line with our commitment to generate at
least £1.6 billion of Retail free cash flow over the three years to 2026/27.
Adjusted Retail underlying operating cash flow before changes in working
capital increased by £33 million year-on-year to £2,292 million (2024/25:
£2,259 million), driven by higher underlying EBITDA.
Cash inflow from reduced working capital of £128 million (2024/25: £98
million working capital reduction) was driven by an increase in payables,
primarily due to improved payment terms, more than offsetting higher
inventory. Retail non-underlying operating cash costs were £80 million. £73
million related to retail restructuring cash costs, with £13 million related
to the multi-year programme announced in November 2020 and £60 million
associated with the Next Level Sainsbury's strategy launched in February 2024.
We continue to expect total cash costs relating to the three-year Next Level
Sainsbury's strategy of around £150 million, with £91 million incurred to
date.
Pension cash contributions of £27 million (2024/25: £45 million) reduced
£18 million year-on-year due to a funding level event occurring in 2024/25,
leading to reduced contributions under the Asset Backed Contributions scheme.
We expect cash contributions in 2026/27 to be around £27 million.
We paid corporation tax of £112 million in the year (2024/25: £89 million).
The £23 million increase in tax payable year on year is mainly due to reduced
levels of tax deductible non-underlying expenses and timing of deductions
related to share based payments.
Cash capital expenditure was £843 million (2024/25: £825 million). The
year-on-year increase was primarily driven by continued investment in new
space and space rebalancing as well as increased investment in technology,
automation, personalisation and retail media. We expect core retail cash
capital expenditure in 2026/27 to be between £800 and £850 million.
Proceeds from the disposal of property, plant and equipment were £41 million
(2024/25: £45 million), of which £13 million related to the Hendon mixed use
development site which completed in 2024/25. The remaining proceeds resulted
from disposals, in line with our property strategy.
As at 28 February 2026, net debt was £5,743 million (1 March 2025: £5,758
million), a decrease of £15 million.
Excluding the impact of lease liabilities, non-lease net debt reduced by £61
million in the year to £203 million (1 March 2025: £264 million),
benefitting from £100 million of net cash proceeds arising from the phased
withdrawal from Financial Services which will not be returned to shareholders
until 2026/27.
Net debt includes lease liabilities of £5,540 million, up £46 million (1
March 2025: £5,494 million).
Financial ratios
Key financial ratios a) As at As at
28 February 2026 1 March 2025
Return on capital employed 8.9% 9.0%
Net debt to EBITDA 2.6x 2.6x
Fixed charge cover 2.7x 2.8x
a) Reconciliations are set out in notes A4.1, A3.2 and A4.2 of the APMs.
Return on capital employed (ROCE) declined 10 basis points year on year,
primarily driven by lower Total underlying 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 also stable.
Defined benefit pensions
At 28 February 2026, the net defined benefit surplus under IAS 19 for the
Group was £525 million (excluding deferred tax). This marks a decrease of
£206 million from the prior year-end date of 1 March 2025. This is primarily
due to higher liabilities arising from adoption of the latest CMI mortality
forecasts, higher forecast inflation and model updates required following
completion of the 2024 triennial valuation, partially offset by a 10 bps
increase in the discount rate driven by widening AA credit spreads.
The latest triennial valuation as at 30 September 2024 (the 2024 triennial)
was completed on 20 March 2026 and showed a surplus of £171 million,
including the estimated value of the Scheme's entitlements under the asset
backed contribution (ABC) structure. Excluding these entitlements, the surplus
was £15 million. The 2024 triennial, among other actuarial updates, assumes
higher inflation volatility, which has the effect of reducing expected
liabilities. This may result in an earlier end to contributions under the ABC
structure. To provide additional assurance to the Scheme in that context, the
Group has established an escrow account in favour of the Scheme, which will
expire no later than 2048. Funds will be deposited into the escrow account,
and either be released to the Group, or contributed to the Scheme, depending
on agreed funding triggers. This arrangement, coupled with the ABC
arrangement, will act to protect the Scheme's access to funds while reducing
the risk that the Company might overfund the Scheme. There are no funds
deposited in the escrow arrangement as at 28 February 2026.
We expect total defined benefit pension scheme cash contributions to be around
£27 million in 2026/27 (2025/26: £27 million).
Sainsbury's Argos Group Group
28 February 2026 28 February 2026 28 February 2026 1 March
£m £m £m 2025
£m
Present value of funded obligations (5,049) (774) (5,823) (5,575)
Fair value of plan assets 5,454 917 6,371 6,329
Pension surplus 405 143 548 754
Present value of unfunded obligations (23) - (23) (23)
Retirement benefit surplus 382 143 525 731
Deferred income tax liability (158) (36) (194) (218)
Net retirement benefit surplus 224 107 331 513
Consolidated income statement
52 weeks to 28 February 2026 52 weeks to 1 March 2025 (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 33,647 - 33,647 32,772 - 32,772
Cost of sales (31,369) (72) (31,441) (30,511) (78) (30,589)
Gross profit/(loss) 2,278 (72) 2,206 2,261 (78) 2,183
Administrative expenses (1,328) (63) (1,391) (1,302) (99) (1,401)
Other income 75 7 82 55 53 108
Operating profit/(loss) 1,025 (128) 897 1,014 (124) 890
Finance income 6 24 40 64 31 36 67
Finance expense 6 (331) (11) (342) (336) (14) (350)
Profit/(loss) before tax - continuing operations 718 (99) 619 709 (102) 607
Income tax (expense)/credit 7 (210) 5 (205) (205) 19 (186)
Profit/(loss) after tax - continuing operations 508 (94) 414 504 (83) 421
Loss after tax - discontinued operations 8 - (21) (21) - (168) (168)
Profit/(loss) for the financial period 508 (115) 393 504 (251) 253
Earnings per share 9 pence pence pence pence
Basic - total 22.3 17.3 21.6 10.9
Diluted - total 21.9 16.9 21.2 10.7
Earnings per share - from continuing operations 9
Basic - continuing 18.2 18.1
Diluted - continuing 17.8 17.8
* Refer to note 2 for details of prior year restatements.
Consolidated statement of comprehensive income/(loss)
52 weeks to 28 February 2026 52 weeks to 1 March 2025 (restated*)
Note £m £m
Profit for the financial year 393 253
Items that will not be subsequently reclassified to the income statement
Remeasurement on defined benefit pension schemes 20 (265) (33)
Cash flow hedges fair value movements - 1
Tax relating to items that will not be reclassified 67 8
(198) (24)
Items that may be subsequently reclassified to the income statement
Currency translation differences (1) -
Movements on financial assets at fair value through other comprehensive income (1) 1
Cash flow hedges fair value movements (40) 13
Items reclassified from cash flow hedge reserve 5 2
Tax relating to items that may be reclassified 5 (4)
(32) 12
Total other comprehensive loss for the year (net of tax) (230) (12)
Total comprehensive income for the year 163 241
Continuing operations 184 409
Discontinued operations 8 (21) (168)
Total comprehensive income for the year 163 241
* Refer to note 2 for details of prior year restatements.
Consolidated balance sheet
28 February 2026 1 March 2025 (restated*) 2 March 2024 (restated*)
Note £m £m £m
Non-current assets
Property, plant and equipment 11 9,386 9,358 9,282
Right-of-use assets 12 4,486 4,455 4,296
Intangible assets 13 838 807 806
Investments in joint ventures and associates 2 2 2
Other financial assets 129 769 761
Trade and other receivables 22 42 108
Amounts due from Financial Services customers and other banks - - 1,467
Derivative financial assets 18 35 68
Retirement benefit surplus 20 548 754 714
15,429 16,222 17,504
Current assets
Inventories 1,987 1,946 1,927
Trade and other receivables 431 572 582
Amounts due from Financial Services customers and other banks - - 3,050
Other financial assets - 1,167 26
Derivative financial assets 7 15 8
Income taxes receivable 19 86 75
Cash and cash equivalents 17 1,067 2,222 1,978
3,511 6,008 7,646
Assets of disposal group and non-current assets held for sale 15 3 2,527 10
3,514 8,535 7,656
Total assets 18,943 24,757 25,160
Current liabilities
Trade and other payables (5,565) (5,489) (5,261)
Amounts due to Financial Services customers and other deposits - (1,955) (5,515)
Borrowings 19 (80) (72) (65)
Lease liabilities 12 (505) (483) (515)
Other financial liabilities (21) - -
Derivative financial liabilities (20) (15) (28)
Income taxes payable - (4) -
Provisions 16 (140) (230) (113)
(6,331) (8,248) (11,497)
Liabilities of disposal group held for sale 15 - (3,136) -
(6,331) (11,384) (11,497)
Net current liabilities (2,817) (2,849) (3,841)
Non-current liabilities
Trade and other payables (22) (24) (11)
Amounts due to Financial Services customers and other deposits - (13) (206)
Borrowings 19 (981) (1,042) (1,130)
Lease liabilities 12 (5,035) (5,011) (4,839)
Derivative financial liabilities (3) (11) (59)
Retirement benefit deficit 20 (23) (23) (24)
Deferred income tax liability (302) (327) (256)
Provisions 16 (96) (157) (167)
(6,462) (6,608) (6,692)
Total liabilities (12,793) (17,992) (18,189)
Net assets 6,150 6,765 6,971
Equity
Called up share capital 647 669 678
Share premium 1,465 1,448 1,430
Merger reserve 173 173 568
Capital redemption and other reserves (65) (54) 955
Retained earnings 3,930 4,529 3,340
Total equity shareholders' funds 6,150 6,765 6,971
* Refer to note 2 for details of prior year restatements.
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 2 March 2025 (as previously reported) 669 1,448 173 (54) 4,415 6,651
Opening balance adjustment - - - - 114 114
At 2 March 2025 (restated*) 669 1,448 173 (54) 4,529 6,765
Profit for the financial year - - - - 393 393
Other comprehensive loss (pre-tax) - - - (37) (265) (302)
Tax relating to components of other comprehensive loss - - - 5 67 72
Total comprehensive (loss)/income - - - (32) 195 163
Cash flow hedges gains transferred to inventory - - - 13 - 13
Transactions with owners:
Transfer between reserves - - - 6 (6) -
Dividends 10 - - - - (566) (566)
Share-based payment - - - - 80 80
Purchase of own shares for share schemes - - - (85) - (85)
Shares allocated in respect of share option schemes 3 17 - 62 (62) 20
Purchase of own shares for cancellation - - - (251) - (251)
Cancellation of own shares (25) - - 276 (251) -
Tax on items charged to equity - - - - 11 11
At 28 February 2026 647 1,465 173 (65) 3,930 6,150
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 (as previously reported) 678 1,430 568 955 3,237 6,868
Opening balance adjustment - - - - 103 103
At 3 March 2024 (restated*) 678 1,430 568 955 3,340 6,971
Profit for the financial year - - - - 253 253
Other comprehensive income/(loss) (pre-tax) - - - 17 (33) (16)
Tax relating to components of other comprehensive income/(loss) - - - (4) 8 4
Total comprehensive income - - - 13 228 241
Cash flow hedges gains transferred to inventory - - - 18 - 18
Transactions with owners:
Transfer between reserves - - (395) (1,035) 1,430 -
Dividends 10 - - - - (308) (308)
Share-based payment - - - - 80 80
Purchase of own shares for share schemes - - - (63) - (63)
Shares allocated in respect of share option schemes 12 18 - 37 (44) 23
Purchase of own shares for cancellation - - - (200) - (200)
Cancellation of own shares (21) - - 221 (200) -
Tax on items charged to equity - - - - 3 3
At 1 March 2025 (restated*) 669 1,448 173 (54) 4,529 6,765
* Refer to note 2 for details of prior year restatements.
Consolidated cash flow statement
52 weeks to 28 February 2026 52 weeks to 1 March 2025 (restated*)
Note £m £m
Cash flows from operating activities
Operating profit - continuing operations 897 890
Depreciation 11,12 1,039 1,033
Amortisation 13 199 182
Net impairment loss on non-financial assets 14 23 22
Loss / (profit) on sale of non-current assets and early termination of leases 3 (53)
Fair value movements 12 (2)
Share-based payments expense 75 73
Defined benefit scheme expense 20 8 8
Defined benefit pension scheme payments 20 (27) (45)
Operating cash flows before changes in working capital - continuing operations 2,229 2,108
Changes in working capital
Increase in inventories (29) -
Decrease/(increase) in other financial assets 1,807 (1,149)
Decrease in trade and other receivables 81 15
Increase in trade and other payables 138 247
Decrease in amounts due to Financial Services customers and other deposits (1,968) -
Decrease in provisions (71) (7)
Cash generated from operating activities - continuing operations 2,187 1,214
Interest paid (348) (359)
Corporation tax paid (65) (53)
Net cash generated from operating activities - continuing operations 1,774 802
Cash flows from investing activities
Purchase of property, plant and equipment (613) (617)
Initial direct costs on new leases (8) (34)
Purchase of intangible assets (230) (208)
Proceeds from disposal of property, plant and equipment 41 45
Interest received 23 27
Net cash used in investing activities - continuing operations (787) (787)
Cash flows from financing activities
Proceeds from issuance of ordinary shares 20 20
Proceeds from borrowings - 544
Repayment of borrowings (59) (623)
Purchase of own shares for share schemes (64) (63)
Purchase of own shares for cancellation (251) (200)
Capital repayment of lease obligations (504) (487)
Dividends paid on ordinary shares 10 (566) (308)
Net cash used in financing activities - continuing operations (1,424) (1,117)
Net (decrease)/increase in cash and cash equivalents
Continuing operations (437) (1,102)
Discontinued operations 8 (718) 1,345
Total (decrease)/increase in cash and cash equivalents (1,155) 243
Opening cash and cash equivalents 2,221 1,978
Closing cash and cash equivalents 17 1,066 2,221
Disclosed in the balance sheet:
Cash and cash equivalents 1,067 2,222
Overdraft (1) (1)
1,066 2,221
* Refer to note 2 for details of prior year restatements.
Notes to the consolidated financial statements
1 General information
The financial information, which comprises the Consolidated income statement,
Consolidated statement of comprehensive income/(loss), 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 28 February 2026 (prior financial year: 52
weeks to 1 March 2025) 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 2026 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 2026.
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 Charterhouse Street, London, EC1M 6HA, United Kingdom.
The consolidated financial statements for the 52 weeks to 28 February 2026
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
2.1 Basis of preparation and presentation
The Group's financial statements have been prepared in accordance with
UK-adopted international accounting standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those standards.
They have been prepared under the historical cost convention, except for
certain financial instruments, defined benefit pension scheme assets and
share-based payments, as explained in the accounting policies below.
Sainsbury's Bank plc and its subsidiaries have been consolidated for the 12
months to 28 February 2026, being the Bank's year-end date (2025: 28 February
2025). Adjustments are made for the effects of significant transactions or
events that occur between this time period and the Group's financial year
comprising the 52 weeks to 28 February 2026.
Unless otherwise stated, material accounting policies have been applied
consistently to all periods presented in the financial statements.
Prior period restatements
a) Deferred tax
The tax charge in the comparative period income statement and the comparative
period balance sheets has been restated to incorporate the deferred tax impact
arising from a misclassification of assets between those impacting deferred
tax and those which do not, and an omission of the tax effects of prior year
impairments and disposals. Prior year adjustments from the finalisation of
each year's tax compliance process that are related to fixed assets have been
included within the restated figures. Therefore, the restatement also includes
current tax impacts.
b) Balance sheet line items
Comparative period amounts of the following line items within the Group
balance sheet have been re-presented, with no impact on net assets:
· Taxes payable, which was previously presented on a net basis, has been
re-presented to separately disclose income taxes receivable and income taxes
payable, and to present other taxation and social security payables within
trade and other payables.
· Lease liabilities have been re-presented to correct the classification between
certain current and non-current liabilities.
· The net retirement benefit surplus has been re-presented to separately
disclose the present value of unfunded obligations as retirement benefit
deficit, as the Group does not have the right to offset these amounts.
· Cash and cash equivalents have been re-presented to reclassify other
investment securities, whereby the maturity date of the underlying instrument
exceeded 3 months at recognition but was less than 3 months at the prevailing
balance sheet date, to other financial assets within current assets.
c) Discontinued operations and reclassification to non-underlying
Discontinued operations were previously included in underlying measures whilst
the associated trading activities remained ongoing. Following completion of
the NatWest, NewDay and NoteMachine disposals, these activities are
substantially ceased, and have therefore been reclassified to non-underlying
so as to only reflect ongoing trading performance within underlying results.
In July 2025, the Group agreed to sell the Travel Money business to Fexco
Group, with the sale completing in January 2026. The Travel Money business is
presented as a discontinued operation in both the current and comparative
periods.
Prior period comparatives
The prior period comparatives have been restated in accordance with IAS 8:
'Accounting Policies, Changes in Accounting Policies and Errors' and have
impacted the primary financial statements as follows.
Income statement
Underlying items Non-underlying items Total
As previously reported Deferred tax Discontinued operations As restated As previously reported Deferred tax Discontinued operations As restated As previously reported Deferred tax Discontinued operations As restated
(a) (c) (a) (c) (a) (c)
For the 52 weeks to 1 March 2025 £m £m £m £m £m £m £m £m £m £m £m £m
Continuing operations
Revenue 32,812 - (40) 32,772 - - - - 32,812 - (40) 32,772
Cost of sales (30,513) - 2 (30,511) (78) - - (78) (30,591) - 2 (30,589)
Gross profit/(loss) 2,299 - (38) 2,261 (78) - - (78) 2,221 - (38) 2,183
Administrative expenses (1,325) - 23 (1,302) (100) - 1 (99) (1,425) - 24 (1,401)
Other income 55 - - 55 53 - - 53 108 - - 108
Operating profit/(loss) 1,029 - (15) 1,014 (125) - 1 (124) 904 - (14) 890
Finance income 31 - - 31 36 - - 36 67 - - 67
Finance expense (336) - - (336) (14) - - (14) (350) - - (350)
Profit/(loss) before tax - continuing operations 724 - (15) 709 (103) - 1 (102) 621 - (14) 607
Income tax (expense)/credit (216) 7 4 (205) 15 4 - 19 (201) 11 4 (186)
Profit/(loss) after tax - continuing operations 508 7 (11) 504 (88) 4 1 (83) 420 11 (10) 421
Loss after tax - discontinued operations 31 - (31) - (209) - 41 (168) (178) - 10 (168)
Profit/(loss) for the financial period 539 7 (42) 504 (297) 4 42 (251) 242 11 - 253
Balance sheets
As previously reported FY24 opening reserves adj Deferred tax Cash Taxes payable Lease liabilities Net retirement benefit As restated
(a) (a) (b) (b) (b) (b)
As at 1 March 2025 £m £m £m £m £m £m £m £m
Non-current assets
Retirement benefit surplus 731 - - - - - 23 754
16,199 - - - - - 23 16,222
Current assets
Other financial assets 612 - - 555 - - - 1,167
Income taxes receivable - 30 (18) - 74 - - 86
Cash and cash equivalents 2,777 - - (555) - - - 2,222
5,922 30 (18) - 74 - - 6,008
Total assets 24,648 30 (18) - 74 - 23 24,757
Current liabilities
Trade and other payables (5,278) - - - (211) - - (5,489)
Lease liabilities (590) - - - - 107 - (483)
Income taxes payable (141) - - - 137 - - (4)
(8,281) - - - (74) 107 - (8,248)
Net current liabilities (2,968) 30 (18) - - 107 - (2,849)
Non-current liabilities
Lease liabilities (4,904) - - - - (107) - (5,011)
Retirement benefit deficit - - - - - - (23) (23)
Deferred income tax liability (429) 73 29 - - - - (327)
(6,580) 73 29 - - (107) (23) (6,608)
Total liabilities (17,997) 73 29 - (74) - (23) (17,992)
Net assets 6,651 103 11 - - - - 6,765
Equity
Retained earnings 4,415 103 11 - - - - 4,529
Total equity shareholders' funds 6,651 103 11 - - - - 6,765
As previously reported Deferred tax Cash Taxes payable Lease liabilities Net retirement benefit As restated
(a) (b) (b) (b) (b)
As at 2 March 2024 £m £m £m £m £m £m £m
Non-current assets
Retirement benefit surplus 690 - - - - 24 714
17,480 - - - - 24 17,504
Current assets
Other financial assets 17 - 9 - - - 26
Income taxes receivable - 30 - 45 - - 75
Cash and cash equivalents 1,987 - (9) - - - 1,978
7,571 30 - 45 - - 7,646
Total assets 25,061 30 - 45 - 24 25,160
Current liabilities
Trade and other payables (5,091) - - (170) - - (5,261)
Lease liabilities (515) - - - - - (515)
Income taxes payable (125) - - 125 - - -
(11,452) - - (45) - - (11,497)
Net current liabilities (3,871) 30 - - - - (3,841)
Non-current liabilities
Lease liabilities (4,839) - - - - - (4,839)
Retirement benefit deficit - - - - - (24) (24)
Deferred income tax liability (329) 73 - - - - (256)
(6,741) 73 - - - (24) (6,692)
Total liabilities (18,193) 73 - (45) - (24) (18,189)
Net assets 6,868 103 - - - - 6,971
Equity -
Retained earnings 3,237 103 - - - - 3,340
Total equity shareholders' funds 6,868 103 - - - - 6,971
Cash flow statement
As previously reported Discontinued operations Cash As restated
(c) (b)
For the 52 weeks to 1 March 2025 £m £m £m £m
Operating profit 904 (14) - 890
Share-based payments expense 75 (2) - 73
Operating cash flows before changes in working capital - continuing operations 2,124 (16) - 2,108
Changes in working capital
Decrease/(increase) in other financial assets (603) - (546) (1,149)
Cash generated from operating activities - continuing operations 1,776 (16) (546) 1,214
Net cash generated from operating activities - continuing operations 1,364 (16) (546) 802
Net (decrease)/increase in cash and cash equivalents
Continuing operations (540) (16) (546) (1,102)
Discontinued operations 1,329 16 - 1,345
Total (decrease)/increase in cash and cash equivalents 789 - (546) 243
Opening cash and cash equivalents 1,987 - (9) 1,978
Closing cash and cash equivalents 2,776 - (555) 2,221
2.2 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 16 months to 10 September 2027.
In assessing the Group's ability to continue as a going concern, the Directors
have considered the Group's most recent corporate planning processes. This
includes an annual review that considers profitability, the Group's cash
flows, committed funding and liquidity positions, financial covenant, and
forecasted future funding requirements typically over three years, with a
further year of indicative movements.
The Group's most recent corporate planning 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 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.
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 which remain in issuance. In
addition, the Group has in place an inflation-linked amortising loan with a
principal of £378 million outstanding at the reporting date, with a maturity
date of April 2031. Refer to note 19.1 for details of the amortisation
profile.
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 tranches. Tranche A has a final
maturity of December 2029, and Tranche B has a final maturity of December
2028. As at 28 February 2026, 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, severe but plausible scenarios in relation to the
Group's principal risks have been considered by overlaying them into the
corporate plan and assessing the impact on cash flows, net debt, financial
covenant and funding headroom. These severe but plausible scenarios included
modelling inflationary pressures on both food margins and general
recession-related risks, including those which may arise from conflict in the
Middle East, the impact of a cyber-attack on operations, payment of a
regulatory fine and the failure to deliver planned cost savings. In addition,
a reverse stress test was performed to assess the additional level of sales
decline required before the Group fully utilises its available funding and
mitigations or breaches its financial covenant. The required reduction was
considered extreme and implausible.
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
operating expenditure, bonus and pay awards, and pausing dividend payments.
Previously, additional consideration was given to the credit, liquidity and
capital adequacy of the Bank given the phased withdrawal from Financial
Services and transition to a distributed model. Following the completed sales
with NatWest, NewDay, NoteMachine, Allianz and Fexco in the current and
previous period, the current capital position and the progress made on
transition, the Directors no longer deem this a material consideration in
making an assessment over 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.
2.3 New standards, interpretations and amendments adopted by the Group
a) New accounting standards adopted by the Group
There were no new accounting standards, interpretations and amendments to
standards and IFRIC interpretations that became applicable during the year
which had a material impact on the Group's results or net assets. Accordingly,
no changes were required 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 1 March 2025.
b) New accounting standards in issue but not yet effective
The Group has not applied any standards, interpretations or amendments that
have been issued but are not yet effective. With the exception of IFRS 18
'Presentation and Disclosure in Financial Statements', the new requirements
are not expected to have a material impact on the Group's accounting policies,
results or net assets.
IFRS 18 'Presentation and Disclosure in Financial Statements' will become
effective in the financial statements for the financial year ending 26
February 2028. IFRS 18 sets out overall requirements for the presentation and
disclosure in financial statements, and all income and expenses will be
classified into one of five categories on the income statement: operating,
investing, financing, taxation and discontinued operations. The standard will
also introduce 'management defined performance measures', a subset of the
Group's alternative performance measures, which will be disclosed in the
audited financial statements.
The Group has commenced its assessment of IFRS 18, which will include
determining the impacts on the Group including system changes, transition
plans and quantifying the impacts of the new standard on the comparative
financial statements. The Group's profit before tax will not change.
2.4 Alternative Performance Measures (APMs)
In the reporting of financial information, the Directors use certain
Alternative Performance Measures (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 IFRS 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
Underlying profit measures are presented to supplement IFRS results which also
reflects how performance is measured internally. These measures exclude items
classified as non-underlying in order to present performance on a consistent
basis between periods. Further information on non-underlying items is provided
in note 3.
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 include further information on the
definition, purpose and reconciliation to the closest IFRS measure.
Changes to APMs
The definition of the Group's Retail like-for-like sales APM has been updated
during the period to exclude VAT. In prior periods, this measure was presented
inclusive of VAT. The revised approach is considered to provide more relevant
information by aligning more closely with amounts presented under IFRS.
Accordingly, the comparative Retail like-for-like sales APM reconciliation has
been re-presented to reflect this change.
3 Non-underlying items
2026
Financial Services model Retail restructuring programmes Impairment of non-financial assets Pensions Other Total
Note 3.1 3.2 3.3 3.4 3.5
Continuing operations £m £m £m £m £m £m
Cost of sales - (58) (7) - (7) (72)
Administrative expenses (8) (13) - (8) (34) (63)
Other income - - - 1 6 7
Affecting operating profit (8) (71) (7) (7) (35) (128)
Net finance (costs)/income - (3) - 40 (8) 29
Affecting profit before tax - continuing operations (8) (74) (7) 33 (43) (99)
Affecting loss before tax - discontinued operations 8 (29)
Affecting profit before tax for the financial year (128)
Being:
Non-financial asset impairments - (3) (7) - - (10)
Accelerated depreciation of assets and acquisition adjustments - (35) - - (17) (52)
Loss on disposal of properties - - - - (2) (2)
Property closure provisions - (12) - - - (12)
Employee costs - (15) - - - (15)
Non-underlying finance (costs)/income - (3) - 40 (8) 29
Fair value movements (1) - - 1 (7) (7)
Other net costs (7) (6) - (8) (9) (30)
Affecting profit before tax - continuing operations (8) (74) (7) 33 (43) (99)
2025 (restated*)
Financial Services model Retail restructuring programmes Impairment of non-financial assets Pensions Other Total
Note 3.1 3.2 3.3 3.4 3.5
Continuing operations £m £m £m £m £m £m
Cost of sales - (64) (16) - 2 (78)
Administrative expenses (16) (58) - (8) (17) (99)
Other (expense)/income - (4) - - 57 53
Affecting operating profit (16) (126) (16) (8) 42 (124)
Net finance (costs)/income - (2) - 36 (12) 22
Affecting profit before tax - continuing operations (16) (128) (16) 28 30 (102)
Affecting loss before tax - discontinued operations 8 (223)
Affecting profit before tax for the financial year (325)
Being:
Non-financial asset impairments - (4) (16) - - (20)
Accelerated depreciation of assets and acquisition adjustments - (42) - - (17) (59)
Profit on disposal of properties - - - - 57 57
Property closure provisions - (12) - - - (12)
Employee costs (7) (43) - - - (50)
Onerous contracts (8) - - - - (8)
Non-underlying finance income/(costs) - - - 36 (12) 24
Fair value movements - - - - 2 2
Other net costs (1) (27) - (8) - (36)
Affecting profit before tax - continuing operations (16) (128) (16) 28 30 (102)
*Refer to note 2.1 (c) for details of prior year restatements.
The impact of non-underlying items on Retail cash generated from operations is
presented in note A2.2.
3.1 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 8.
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.
3.2 Retail restructuring programme
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, we
commenced a multi-year restructuring programme in the prior financial year
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 previously announced, the
programme also includes the closure of food counters, converting cafes to
expert partners, and converting remaining scratch bakeries. Costs have
continued to be incurred in the current period, including in relation to
restructuring local delivery hubs for Argos, where colleagues' shifts will
change.
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.
For accelerated depreciation of assets, the remaining useful economic lives of
corresponding sites have been reassessed to align with the latest closure
dates, resulting in an acceleration in depreciation of these assets. The
existing depreciation of these assets (depreciation that would have been
recognised absent a closure decision) is recognised within underlying
expenses, whereas accelerated depreciation above this is recognised within
non-underlying expenses.
Property closure provisions relate to 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.
Other net costs comprise predominantly consultancy costs.
3.3 Impairment of non-financial assets
Separate from restructuring initiatives and property-related transactions, the
Group has recognised £7 million (2025: £16 million) of impairment in
relation to certain non-trading sites whereby rent reviews at previously
impaired sites caused an increase in the associated right-of-use assets, and,
in prior periods, sub-tenant defaults. For further details, refer to note 14.
3.4 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.
3.5 Other
Comprises:
· Acquisition adjustments relate to the unwind of non-cash fair value
adjustments arising from the Home Retail Group acquisition
· Non-underlying finance and fair value movements comprising £8 million (2025:
£12 million) of finance costs relating to lease interest on impaired
non-trading sites, and a £7 million loss (2025: £2 million gain) within cost
of sales relating to adverse (2025: favourable) movements on long-term, fixed
price Power Purchase agreements (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 facilitate the comparability of underlying
results between periods
· Other net costs include income recognised in relation to the settlement of a
legal case involving European truck manufacturers, and consultancy costs in
relation to corporate transaction activity
· Property-related transactions in 2025 of £57 million predominantly related 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
4 Segment reporting
The Group's operating segments have been determined based on the information
regularly provided to the Chief Operating Decision Maker (CODM). In the
current period, it has been reassessed that the CODM is considered to be the
Group PLC Board, which uses the information regularly provided to make optimal
decisions on the allocation of resources and assess performance.
Additionally in the current period, to ensure appropriate focus on both the
Sainsbury's and Argos businesses, the operating results of these two
businesses are now regularly reviewed by the CODM to make decisions about the
resources to be allocated to each. There are clear separate responsibilities
for the commercial proposition across Sainsbury's (including grocery, general
merchandise and clothing) and Argos respectively.
As such, during the current period, the CODM has been presented information
for the following operating segments:
· Retail - Sainsbury's
· Retail - Argos
· Financial Services
This differs from the prior year, whereby the CODM was presented with
information for Food; General Merchandise and Clothing; and Financial Services
respectively.
In determining the Group's reportable segments, management has considered the
economic characteristics, in particular average gross margin, similarity of
products, production processes, customers, sales methods and regulatory
environment of its two Retail segments. Given the similar economic
characteristics between them, these two segments have been aggregated into one
'Retail' segment within the financial statements as this provides users with
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. This
measure is consistent with that used elsewhere in the Group's internal
reporting.
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.
Fuel revenue comprises sales from Petrol Filling Stations (PFS) and the Ultra
Rapid Electric Vehicle charging business (Smart Charge). In prior periods,
revenue from Smart Charge was reported within Grocery, General Merchandise and
Clothing. To better reflect the nature of these sales, Smart Charge revenue
has been reclassified to Fuel revenue. As a result, comparative figures have
been re-presented. Grocery, General Merchandise and Clothing revenue has been
re-presented from £28,762 million and Fuel revenue has been re-presented from
£3,868 million for the 52 weeks ended 1 March 2025.
4.1 Income statement
2026
Retail Financial Group
Services
Continuing operations Note £m £m £m
Revenue
Grocery, general merchandise and clothing 29,992 - 29,992
Fuel 3,559 - 3,559
Interest receivable - 58 58
Fees and commission - 38 38
33,551 96 33,647
Underlying operating profit 1,025 - 1,025
Underlying finance income 6 24 - 24
Underlying finance costs 6 (331) - (331)
Underlying profit before tax 718 - 718
Non-underlying items 3 (99)
Profit before tax - continuing operations 619
Income tax expense 7 (205)
Profit after tax - continuing operations 414
Loss after tax - discontinued operations 8 (21)
Profit after tax - total 393
2025 (restated*)
Retail Financial Group - Continuing operations
Services
Continuing operations Note £m £m £m
Revenue
Grocery, general merchandise and clothing 28,754 - 28,754
Fuel 3,876 - 3,876
Interest receivable - 103 103
Fees and commission - 39 39
32,630 142 32,772
Underlying operating profit/(loss) 1,036 (22) 1,014
Underlying finance income 6 31 - 31
Underlying finance costs 6 (336) - (336)
Underlying profit/(loss) before tax 731 (22) 709
Non-underlying items 3 (102)
Profit before tax - continuing operations 607
Income tax expense 7 (186)
Profit after tax - continuing operations 421
Loss after tax - discontinued operations 8 (168)
Profit after tax - total 253
* Refer to note 2.1 (a) and (c) for details of prior year restatements.
4.2 Other segment items
2026
Retail Financial Group - Continuing operations Group - Discontinued operations Group Total
Services
Note £m £m £m £m £m
Depreciation expense
Property, plant and equipment 11 509 - 509 - 509
Right-of-use assets 12 530 - 530 - 530
Amortisation expense
Intangible assets 13 199 - 199 - 199
Impairment of non-financial assets 14 23 - 23 - 23
Impairment loss on financial assets - 1 1 - 1
Share based payments 72 3 75 5 80
2025 (restated*)
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 2 73 7 80
* Refer to note 2.1 (c) for details of prior year restatements.
2026 2025
Retail Financial Group Retail Financial Group
Services
Services
Note £m £m £m £m £m £m
Additions to non-current assets
Property, plant and equipment 11 572 - 572 629 - 629
Right-of-use assets 12 572 - 572 676 - 676
Intangible assets 13 230 - 230 208 - 208
4.3 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 Group
also maintains an operational presence in the Republic of Ireland and Asia,
which does not give rise to significant revenues, capital expenditure or
segment net assets in those territories.
5 Supplier arrangements
The following amounts in relation to supplier arrangements are held on the
balance sheet:
2026 2025
£m £m
Within inventory (3) (2)
Within current trade receivables
Supplier arrangements due 45 54
Accrued supplier arrangements 51 65
Within current trade payables
Supplier arrangements due 47 37
Total supplier arrangements 140 154
Additionally, £13 million (2025: £18 million) of supplier arrangements
contractually agreed but not yet earned is held on the balance sheet within
deferred income.
6 Finance income and finance costs
2026 2025
Underlying Non-underlying Total Underlying Non-underlying Total
Continuing operations £m £m £m £m £m £m
Interest on bank deposits and other financial assets 23 - 23 29 - 29
IAS 19 pension financing income - 40 40 - 36 36
Finance income on net investment in leases 1 - 1 2 - 2
Finance income 24 40 64 31 36 67
Secured borrowings (29) - (29) (35) - (35)
Unsecured borrowings (35) - (35) (41) - (41)
Lease liabilities (267) (11) (278) (260) (12) (272)
Provisions - amortisation of discount - - - - (2) (2)
Finance costs (331) (11) (342) (336) (14) (350)
7 Taxation
2026 2025 (restated*)
Continuing operations £m £m
Current tax
Current year UK tax 140 107
Under/(over) provision in prior years 7 (3)
Total current tax expense 147 104
Deferred tax
Origination and reversal of temporary differences 51 63
Under provision in prior years 7 23
Recognition of capital losses - (4)
Total deferred tax expense 58 82
Total income tax expense 205 186
Analysed as:
Underlying tax 210 205
Non-underlying tax (5) (19)
Total income tax expense 205 186
Underlying tax rate 29.2% 28.9%
Effective tax rate 33.1% 30.6%
* Refer to note 2.1 (a) and (c) for details of prior year restatements. Tax
associated with discontinued operations is presented in note 8.
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 for the period ended 1 March
2025 onwards. Under these requirements, the Group is liable to pay a top up
tax for any deficit between the minimum tax rate of 15 per cent and the
effective tax rate per jurisdiction. As a primarily UK focused group, paying
tax well in excess of the required minimum, there is no material impact of
GMT.
The Group has 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 Discontinued operations
In January 2024, the Group announced that 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 has resulted in a phased withdrawal with components
completing at various stages.
In July 2025, the Group agreed to sell the Travel Money business to Fexco
Group, with the sale completing in January 2026. The Travel Money business is
presented as a discontinued operation in both the current and comparative
periods.
During the year, the Group completed the previously announced sale of its
personal loan, credit card and retail deposit portfolios to NatWest Group,
disposed of its ATM estate to NoteMachine. In February 2025, the Group
completed the sale of the AFS storecard portfolio to NewDay Group. The results
of these businesses are presented as discontinued operations.
The loss relating to these discontinued operations is set out in note 8.1. The
net gain/(loss) on disposal is measured by reference to the fair value of the
relevant portfolios on derecognition and the associated consideration payable
or receivable, as detailed in note 8.2.
8.1 Discontinued operations loss after tax
2026 2025 (restated)
Note £m £m
Revenue
Interest receivable - 273
Fees and commission income 104 96
104 369
Operating costs (120) (317)
Operating (loss)/profit (16) 52
Restructuring and impairment costs (25) (134)
Net gain/(loss) arising from disposals 8.2 12 (141)
Loss before tax (29) (223)
Income tax credit 8 55
Loss after tax (21) (168)
8.2 Discontinued operations net gain/(loss) arising from disposals
2026 2025 (restated)
£m £m
Fair value of consideration (payable)/receivable a) (244) 149
Fair value of net liabilities/(assets) disposed excluding provisions b) 258 (218)
Write down of net liabilities/loss on net assets disposed 14 (69)
Costs of disposal (2) (72)
Gain/(loss) on disposal before tax 12 (141)
Income tax (expense)/credit (3) 35
Gain/(loss) on disposal after tax 9 (106)
a) Comprises consideration paid to NatWest of £273 million in respect of the
value of the net Core Banking liabilities transferred on 1 May 2025 and
consideration receivable of £29 million in respect of the sale of Travel
Money assets to Fexco Group. The comparative period comprises consideration
payable on the Core Banking portfolio based on pricing mechanisms set out in
the sale agreement measured at the reporting date 1 March 2025, partially
offset by £2 million consideration receivable related to the sale of ATM
assets, and £749 million received relating to the sale of AFS cards and the
debt instrument notes derecognised.
b) Comprises the fair value of net liabilities of the Core Banking portfolios at
the completion date of 1 May 2025 and the fair value of Travel Money assets
derecognised at the completion date of 31 January 2026. Net liabilities were
remeasured to fair value immediately prior to completion of the sale, with
associated fair value movements recognised within operating costs. The
comparative period comprises the fair value of net liabilities of Core Banking
portfolios held for sale, together with ATM-related assets held for sale and
AFS cards assets disposed on 28 February 2025, inclusive of £24 million of
goodwill.
8.3 Assets and liabilities of disposal group and non-current assets classified
as held for sale
2026 2025
£m £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
Total assets of disposal group and non-current assets classified as held for - 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)
8.4 Discontinued operations cash flow statement
2026 2025 (restated)
£m £m
Net cash flows from:
Operating activities (457) 595
Investing activities a) (261) 750
(718) 1,345
a) Net cash flows used in investing activities relate to consideration paid and
received in respect of Core Banking activities disposed. Net cash flows
generated in 2025 primarily related 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.
9 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).
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.
2026 2025
million million
Weighted average number of shares in issue for calculating basic earnings per 2,274.2 2,330.6
share
Weighted average number of dilutive share options 46.6 43.5
Total number of shares for calculating diluted earnings per share 2,320.8 2,374.1
2026 2025 (restated*)
Note £m £m
Underlying profit after tax attributable to ordinary shareholders of the 508 504
parent
Adjustment for non-underlying items after tax (94) (83)
Profit after tax attributable to ordinary shareholders of the parent - 414 421
continuing operations
Loss after tax from discontinued operations 8 (21) (168)
Profit after tax attributable to ordinary shareholders of the parent 393 253
Pence per share Pence per share (restated*)
Basic - total 17.3 10.9
Diluted - total 16.9 10.7
Basic - discontinued operations (0.9) (7.2)
Diluted - discontinued operations (0.9) (7.1)
Basic - continuing operations 18.2 18.1
Diluted - continuing operations 17.8 17.8
Basic - underlying 22.3 21.6
Diluted - underlying 21.9 21.2
* Refer to note 2.1 (a) and (c) for details of prior year restatements.
10 Dividends
2026 2025 2026 2025
pence per share pence per share £m £m
Amounts recognised as distributions to ordinary shareholders:
Financial year ended 2 March 2024
- Final dividend - 9.2 - 217
Financial year ended 1 March 2025
- Interim dividend - 3.9 - 91
- Final dividend 9.7 - 223 -
Financial year ended 28 February 2026
- Interim dividend 4.1 - 93 -
- Special dividend 11.0 - 250 -
24.8 13.1 566 308
Proposed final dividend at financial year end 9.6 214
The proposed final dividend was approved by the Board on 22 April 2026 and is
subject to shareholders' approval at the Annual General Meeting. If approved,
it will be paid on 10 July 2026 to shareholders on the register as at 5 June
2026. No amount for the proposed final dividend has been recognised at the
balance sheet date.
11 Property, plant and equipment
2026 2025
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 11,381 4,505 15,886 11,154 4,919 16,073
Additions 168 404 572 280 349 629
Disposals (105) (526) (631) (26) (730) (756)
Transfer from/(to) assets held for sale 29 - 29 (27) (33) (60)
At end of financial year 11,473 4,383 15,856 11,381 4,505 15,886
Accumulated depreciation and impairment
At beginning of financial year 3,508 3,020 6,528 3,347 3,444 6,791
Depreciation expense 201 308 509 203 329 532
Impairment loss 14 12 - 12 1 5 6
Disposals (75) (525) (600) (22) (727) (749)
Transfer from/(to) assets held for sale 21 - 21 (21) (31) (52)
At end of financial year 3,667 2,803 6,470 3,508 3,020 6,528
Net book value 7,806 1,580 9,386 7,873 1,485 9,358
Capital work-in-progress included above 184 95 279 202 56 258
Transfers from assets held for sale in the year relate to retail non-current
assets where the related asset sales are no longer expected to complete within
the next 12 months.
12 Leases
Group as a lessee
a) Right-of-use assets
2026 2025
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 4,055 400 4,455 3,976 320 4,296
New leases and modifications 419 153 572 487 189 676
Impairment loss 14 (11) - (11) (16) - (16)
Depreciation expense (408) (122) (530) (392) (109) (501)
At end of financial year 4,055 431 4,486 4,055 400 4,455
b) Lease liabilities
2026 2025
Note £m £m
At beginning of financial year 5,494 5,354
New leases and modifications 550 627
Interest expense 6 278 272
Payments (782) (759)
At end of financial year 5,540 5,494
13 Intangible assets
Goodwill Computer software Acquired brands Customer relationships Total
£m £m £m £m £m
Cost
At 2 March 2025 322 1,350 190 32 1,894
Additions - 230 - - 230
Disposals (1) (435) - - (436)
At 28 February 2026 321 1,145 190 32 1,688
Accumulated amortisation and impairment
At 2 March 2025 39 852 164 32 1,087
Amortisation expense - 181 18 - 199
Disposals (1) (435) - - (436)
At 28 February 2026 38 598 182 32 850
Net book value at 28 February 2026 283 547 8 - 838
Capital work-in-progress included above - 54 - - 54
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 (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 (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
In the prior year, following the agreement to sell Core Banking portfolios,
goodwill of £38 million and £39 million of acquired brands was transferred
to the disposal group classified as held for sale. In addition, £24 million
previously allocated to the Home Retail Group CGU was derecognised following
the disposal of AFS cards.
14 Impairment of non-financial assets
14.1 Impairment losses and reversals
Goodwill
There was no impairment of goodwill balances in the current year (2025: nil).
Other non-financial assets
In line with the assumptions and methodology outlined in note 14.2, the Group
assessed whether indicators of impairment existed at the reporting date. As
Argos trading performance was below expectations, management determined that
an indicator of impairment existed in respect of each of the Group's Argos
assets. A full impairment review was undertaken, resulting in an impairment
charge of £2 million. Additionally, an indicator of impairment existed at the
reporting date in respect of trading performance at certain Sainsbury's
stores, and thus a full impairment review was undertaken over these
Sainsbury's stores' assets, which resulted in an impairment charge of £11
million.
In addition to impairment charges arising from the indicator-based review, the
Group recognised impairment charges arising from specific events and
circumstances during the year. These comprised £3 million of impairment as
part of retail restructuring programmes, and £7 million of impairment in
relation to non-trading sites, reflecting the impact of rent reviews.
2026 2025
Retail Financial Services Total Retail Financial Total
Services
Note £m £m £m £m £m £m
Balance sheet
Property, plant and equipment 12 - 12 6 - 6
Right-of-use assets 11 - 11 16 - 16
Intangible assets - - - - - -
Total impairment loss 23 - 23 22 - 22
Income statement
Comprising
Within non-underlying items
Restructuring programmes 3.2 3 - 3 4 - 4
Non-restructuring programmes 3.3 7 - 7 16 - 16
Within underlying items
Argos store assets 2 - 2 2 - 2
Sainsbury's store assets 11 - 11 - - -
Total impairment loss 23 - 23 22 - 22
Discontinued operations - - - - - -
Continuing operations 23 - 23 22 - 22
14.2 Impairment methodology
Assessment of indicators of impairment
At each reporting date, the Group assesses whether there are any indicators
that non-financial assets other than goodwill and intangible assets not yet
available for use may be impaired. Where such indicator exists, the
recoverable amount of the relevant asset or cash generating unit (CGU) is
estimated.
Cash-generating units
For the purpose of impairment testing, CGUs are determined by reference to the
smallest identifiable group of assets that generate cash inflows that are
largely independent from other assets or groups of assets. These have been
assessed as follows:
· Individual stores are typically considered CGUs and represent the collective
assets directly attributable to each respective store
· Within Argos, local fulfilment centres serve a defined set of sub-stores so
are tested for impairment at this aggregated level
· Individual assets are assessed separately for impairment indicators where they
are expected to generate largely independent cash inflows, which would be the
case where a decision is taken to sell an individual asset, such as land bank
development sites
· Certain assets, notably brands, do not generate largely independent cash
inflows so are assessed for indicators of impairment, and tested accordingly
if indicators are identified, at the corporate level in relation to the
business units of the Group: Sainsbury's, Argos and Nectar
Central assets and associated cash flows are allocated to the relevant CGUs to
which they relate. These assets are attributed to the lowest level of CGU
where allocation can be made on a reasonable and consistent basis, with
allocation performed using an appropriate measure such as relative store
sales.
Goodwill acquired is allocated to the CGU or group of CGUs that is expected to
benefit from the synergies of the business combination.
Recoverable amount
The recoverable amount of individual assets, store-level CGUs and group of
stores CGUs is measured as the higher of fair value less cost to dispose and
the value-in-use of cash flows expected to be largely independently generated.
For certain assets that do not generate largely independent cash inflows,
recoverable amount is assessed at the level of the relevant business unit to
which the asset relates. In these cases, value in use represents the most
appropriate basis for determining recoverable amount. Where value-in-use
indicates there is an impairment, consideration is given as to whether fair
value less cost to dispose may be higher than value-in-use, with the higher of
these being taken as the recoverable amount.
Value-in-use
In measuring the value‑in‑use, cash flow projections are based on the
latest management‑approved forecast covering a three‑year forecast period.
Within this period, medium‑term sales and cost projections consider the
outlook for addressable markets, competitor behaviour, expected 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 for forecasting future performance. Online grocery sales are
fulfilled by individual stores and therefore these cash flows are allocated to
the individual store CGUs which fulfil the online sales. In Argos, online
GM&C sales for Click & Collect are allocated to the individual store
CGUs which fulfil the online sales, while online sales fulfilled through home
delivery are not allocated to the individual store CGUs.
Beyond the three‑year forecast period, cash flows are extrapolated using an
estimated average long‑term growth rate.
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 stores forecast level CGUs, base
cash flows are derived from current year performance and extrapolated using
the operating profit growth rate approved by management as part of the annual
planning process.
14.3 Key assumptions and sensitivity
Key assumptions
The following key assumptions are used in determining recoverable amounts
where impairment testing is required:
· Short-term cash flows: derived from latest Board‑approved forecasts covering
a three‑year forecast period
· 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
· Cash flow length: where the useful economic life exceeds management's cash
flow projections, 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 discount rates and long‑term growth rates applied in the impairment
testing of CGUs or groups of CGUs to which goodwill is allocated, as well as
those applied to the Group's portfolio of store cash‑generating units, are
set out below:
2026 2025
Pre-tax discount rate Post-tax discount rate Long-term growth Pre-tax discount rate Post-tax discount rate Long-term growth
Home Retail Group 11.7% 8.8% 2% 11.0% 8.3% 2%
Nectar UK 9.4% 7.1% 2% 9.1% 6.8% 2%
Jacksons Stores Limited 9.4% 7.1% 2% 9.1% 6.8% 2%
Bells Stores Limited 9.4% 7.1% 2% 9.1% 6.8% 2%
Other 9.4% 7.1% 2% 9.1% 6.8% 2%
Sensitivities
Sensitivity analysis on the impairment tests for each CGU or group of CGUs to
which goodwill has been allocated has been performed.
Headroom Discount rate Cash flows
-2pts +2pts -25% +25%
£m £m £m £m £m
Home Retail Group a), c) 150 236 94 36 269
Nectar UK a) 1,796 2,501 1,390 1,310 2,282
Jacksons Stores Limited a), b) 70 88 58 43 98
Bells Stores Limited a), b) 25 29 23 15 36
Other 45 68 31 22 68
a) Cash flows are derived from Board-approved projections for three years and
then extrapolated into perpetuity with an assumed growth rate of 2.0 per cent.
b) Goodwill balances are allocated to individual store CGUs to which they relate.
c) Whilst the sensitivities applied are based on management's best estimate of
what is reasonably possible, continued uncertainty regarding the geopolitical
and global supply environment, or other factors, may lead to the carrying
value not being recovered in full, for example due to further unforeseen
deterioration in cash flows, particularly in relation to consumer
discretionary spend. A further increase in the downside sensitivity of 8 per
cent, to a total 33 per cent reduction in the Home Retail Group cash flows,
would erode the remaining headroom thereafter resulting in impairment.
These sensitives are illustrative and the actual outcomes may vary by greater
amounts than shown above.
15 Assets and liabilities of disposal group and non-current assets held for
sale
Non‑current assets classified as held for sale total £3 million and relate
solely to 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.
As set out in note 8, the Group completed several disposals during its
phased withdrawal from Core Banking Business.
15.1 Assets of disposal group and non-current assets held for sale
2026 2025
Note £m £m
Opening balance 2,527 10
Classified as held for sale in the year 27 2,521
No longer classified as held for sale in the year (19) -
Sold in the year (2,532) (4)
Closing balance 3 2,527
Of which
Assets of disposal group held for sale 8.3 - 2,512
Non-current assets classified as held for sale 3 15
3 2,527
15.2 Liabilities of disposal group held for sale
2026 2025
Note £m £m
Opening balance (3,136) -
Classified as held for sale in the year - (3,136)
Transfer to provisions 16 27 -
Sold in the year 3,109 -
Closing balance - (3,136)
16 Provisions
Property provisions comprise onerous property contract provisions for the
least net cost of exiting from the contract and provisions for dilapidations.
Utilisation is expected to be in line with the profile of the leases to which
the provisions relate.
Insurance provisions comprise liabilities in respect of outstanding insurance
claims in relation to public liability, employer's liability and third-party
motor. Utilisation of the provision at the balance sheet date is expected to
be in line with the settlement of claims.
Restructuring programme provisions comprise mainly redundancies. Restructuring
provisions are expected to be utilised in the next 12 months.
Onerous contract provisions comprise onerous contracts recognised as a result
of the phased withdrawal from Financial Services. Onerous contract provisions
are expected to be utilised in the next 12 months.
Financial Services other provisions comprise contractually committed costs
related to the disposal of AFS cards and potential customer redress payable
arising from the historical 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. Other provisions
are expected to be utilised in the next 12 months.
Retail Financial Services
Property provisions Insurance provisions Restructuring programmes Other provisions Onerous contracts Restructuring programmes Other provisions Total
£m £m £m £m £m £m £m £m
At 2 March 2025 105 63 64 10 95 32 18 387
Additional provisions 21 24 12 1 12 1 6 77
Transfer from liabilities held for sale a) - - - - - - 27 27
Unused amounts released (39) (7) (5) - (7) (2) (9) (69)
Utilisation of provision (10) (25) (40) - (69) (14) (30) (188)
Amortisation of discount 1 - 1 - - - - 2
At 28 February 2026 78 55 32 11 31 17 12 236
Current 140
Non-current 96
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 230
Non-current 157
a) Following the disposal of Core Banking portfolios previously classified as
held for sale, cost to sell provisions previously recognised within
liabilities of disposal group held for sale have been transferred to other
provisions. As at 28 February 2026, £5 million remains provided for migration
and data retention costs contractually committed as part of the disposal.
17 Cash and cash equivalents
2026 2025 (restated*)
£m £m
Cash in hand and bank balances 267 439
Money market funds 466 239
Short-term deposits - 141
Other investment securities - 360
Deposits at central banks 334 1,043
Cash and cash equivalents in the statement of financial position 1,067 2,222
Bank overdrafts (1) (1)
Cash and cash equivalents in the statement of cash flows 1,066 2,221
Restricted amounts included above
Held within the Group's Employee Share Ownership Trust 5 -
Held for unclaimed dividends 3 -
Held for insurance purposes 1 3
9 3
* Money market funds have been re-presented from £1,154 million to £239
million as at 1 March 2025 to better reflect the nature of certain balances as
other investment securities. Additionally, £555 million of other investment
securities has been reclassified to other financial assets within current
assets, refer to note 2.1b) for further details.
Reconciliation of working capital cash flow
2026
· Trade and other receivables: Cashflows differ from the movement in the balance
sheet owing mainly to the presentation of cash flows as discontinued
operations of £62 million.
· Trade and other payables: Cashflows differ from the movement in the balance
sheet owing mainly to reclassifications to other lines in the cash flow
statement of £48 million and presentation of cash flows as discontinued
operations of £46 million.
· Provisions: Cashflows differ from the movement in the balance sheet owing
mainly to the presentation of cash flows as discontinued operations of £87
million.
2025
· Amounts due from Financial Service customers and other banks: Cashflows differ
from the movement in the balance sheet owing mainly to £2,512 million
transferred to assets held for sale on the balance sheet and £2,005 million
cash inflows presented within discontinued operations in the cash flow
statement.
· Amounts due to Financial Service customers and other deposits: Cashflows
differ from the movement in the balance sheet owing mainly to £3,109 million
transferred to liabilities held for sale on the balance sheet and £644
million cash outflows presented within discontinued operations in the cash
flow statement.
· Trade and other receivables: Cashflows differ from the movement in the balance
sheet owing mainly to cash inflows presented within discontinued operations in
the cash flow statement.
· Provisions: Cashflows differ from the movement in the balance sheet owing
mainly to cash outflows presented within discontinued operations in the cash
flow statement.
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
2 March 2025 (restated*) Cash flows excluding interest Net interest (received) / paid Accrued interest Other non-cash movements 28 February 2026
£m £m £m £m £m £m
Retail
Net derivative financial instruments (1) - 1 (1) 5 4
Borrowings (excluding overdrafts) (989) 59 57 (57) (5) (935)
Lease liabilities (5,494) 504 278 (278) (550) (5,540)
Purchase of own shares for share schemes - - - - (21) (21)
Arising from financing activities (6,484) 563 336 (336) (571) (6,492)
Cash and cash equivalents 727 2 - - - 729
Bank overdrafts (1) - - - - (1)
Less: Purchase of own shares for share schemes - - - - 21 21
Retail net debt (5,758) 565 336 (336) (550) (5,743)
Financial Services
Net derivative financial instruments (2) - - - 2 -
Borrowings (excluding overdrafts) (124) - 12 (13) - (125)
Lease liabilities - - - - - -
Arising from financing activities (126) - 12 (13) 2 (125)
Financial assets at fair value through other comprehensive income 1,924 (1,807) - - - 117
Cash and cash equivalents 1,495 (1,157) - - - 338
Financial services net funds 3,293 (2,964) 12 (13) 2 330
Group
Net derivative financial instruments (3) - 1 (1) 7 4
Borrowings (excluding overdrafts) (1,113) 59 69 (70) (5) (1,060)
Lease liabilities (5,494) 504 278 (278) (550) (5,540)
Purchase of own shares for share schemes - - - - (21) (21)
Arising from financing activities (6,610) 563 348 (349) (569) (6,617)
Financial assets at fair value through other comprehensive income 1,924 (1,807) - - - 117
Cash and cash equivalents 2,222 (1,155) - - - 1,067
Bank overdrafts (1) - - - - (1)
Less: Purchase of own shares for share schemes - - - - 21 21
Group net debt (2,465) (2,399) 348 (349) (548) (5,413)
Other non-cash movements relate to new leases, mark to market derivative
movements on debt and foreign exchange.
18 Analysis of net debt continued
Cash Movements Non-Cash Movements
3 March 2024 (restated*) Cash flows excluding interest Net interest (received) / paid Accrued interest Other non-cash movements 1 March 2025 (restated*)
£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 770 1,155 - - (1) 1,924
Cash and cash equivalents 1,101 394 - - - 1,495
Financial services net funds 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 770 1,155 - - (1) 1,924
Cash and cash equivalents 1,978 244 - - - 2,222
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)
* Refer to note 2.1 (b) for details of prior year restatements.
18.2 Reconciliation of own shares purchased for share schemes
The table below presents the reconciliation of own shares purchased for share
schemes between the Group statement of changes in equity and the Group cash
flow statement.
2026 2025
£m £m
Retail
Included in the Group statement of changes in equity (85) (63)
Outstanding amount recognised as financial liabilities a) 21 -
Included in the Group cash flow statement (64) (63)
a) Refer to note 22 for further information on post-balance sheet events.
19 Borrowings
2026 2025
Current Non-current Total Current Non-current Total
£m £m £m £m £m £m
Loan due 2031 72 314 386 64 383 447
Unsecured bond 4 552 556 3 547 550
Sainsbury's Bank Tier 2 Capital 5 120 125 6 118 124
Bank overdrafts 1 - 1 1 - 1
82 986 1,068 74 1,048 1,122
Transaction costs (2) (5) (7) (2) (6) (8)
80 981 1,061 72 1,042 1,114
19.1 Loan due 2031
The loan is secured against 48 (2025: 48) supermarket properties. This is an
inflation-linked amortising loan from the finance company Longstone Finance
plc with an outstanding principal value of £378 million (2025: £438 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.
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 or power and bears no risk
over these entities they are not included in the Group consolidation.
19.2 Undrawn facilities
The Revolving Credit Facility of £1,000 million comprises two £500 million
tranches with maturity dates of December 2029 for Facility A and December 2028
for Facility B. As at 28 February 2026, the Revolving Credit Facility was
undrawn.
19.3 Unsecured Bond
In January 2025 the Group issued £550 million of bonds split in two tranches,
a £250 million five-year tranche maturing June 2030 and a £300 million
ten-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 five-year
tranche and 5.625 per cent per annum on the ten-year tranche. Interest is
payable semi-annually in arrears.
19.4 Sainsbury's Bank Tier 2 capital
The Group has £120 million (2025: £120 million) of fixed rate reset callable
subordinated Tier 2 notes in issuance, which were issued in September 2022.
These notes bear interest on the principal amount at a rate of 10.5 per cent
per annum, payable 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.
19.5 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
All retirement benefit obligations relate to the Sainsbury's Pension Scheme
and three unfunded pension liabilities for former senior employees of
Sainsbury's and Home Retail Group.
The Sainsbury's Pension Scheme comprises two sections:
· The Sainsbury's section, which holds the assets and liabilities of the
original Sainsbury's Pension Scheme
· 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. Both sections are closed to new members and to
future accrual, with benefits determined by past service and salary or accrued
cash balance entitlements. The Scheme is governed by a corporate trustee.
The Group also has unfunded pension liabilities in respect of certain former
senior employees.
The Scheme is also used to pay life assurance benefits to current colleagues.
20.2 Scheme funding and triennial valuation
The Trustee's triennial valuation is used to determine the contributions
required for the Scheme to pay all the benefits due, now and in the future.
The Trustee must allow for a level of prudence in these assumptions resulting
in a relatively high estimate of the Scheme's liabilities. By contrast, IAS 19
'Employee Benefits' requires companies to value the liabilities on a 'best
estimate' basis which delivers a lower estimate of the liabilities and
therefore a more favourable relative financial position. As such, the
accounting valuation is different to the Trustee's triennial valuation basis.
The latest triennial valuation as at 30 September 2024 (the 2024 triennial)
was completed on 20 March 2026, and showed a surplus of £171 million
(comprising a surplus of £93 million in the Sainsbury's section and a surplus
of £78 million in the Argos section), including the estimated value of the
Scheme's entitlements under the asset backed contribution (ABC) structure.
Excluding these entitlements, the surplus was £15 million. The 2024
triennial, among other actuarial updates, assumes higher inflation volatility,
which has the effect of reducing expected liabilities. This may result in an
earlier end to contributions under the ABC structure. To provide additional
assurance to the Scheme in that context, the Group has established an escrow
account in favour of the Scheme, which will expire no later than 2048. Funds
will be deposited into the escrow account, and either be released to the
Group, or contributed to the Scheme, depending on agreed funding triggers.
This arrangement, coupled with the ABC arrangement, will act to protect the
Scheme's access to funds while reducing the risk that the Company might
overfund the Scheme. There are no funds deposited in the escrow arrangement as
at 28 February 2026.
This surplus has been recognised as the Group has concluded that it has an
unconditional right to a refund of any surplus once all member benefits have
been paid. The Group's judgement is that the Trustees would be unable to
unconditionally wind up the plan or enhance members' benefits without the
Group's consent.
20.3 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.
2026 2025
Sainsbury's Argos Group Sainsbury's Argos Group
£m £m £m £m £m £m
Present value of funded obligations (5,049) (774) (5,823) (4,820) (755) (5,575)
Fair value of plan assets 5,454 917 6,371 5,418 911 6,329
Retirement benefit surplus 405 143 548 598 156 754
Present value of unfunded obligations (23) - (23) (13) (10) (23)
Net Retirement benefit surplus 382 143 525 585 146 731
Analysed in the Group balance sheet:
Retirement benefit surplus 405 143 548 598 156 754
Retirement benefit deficit (23) - (23) (13) (10) (23)
Net retirement benefit surplus 382 143 525 585 146 731
Movements in net defined benefit surplus
2026 2025
Assets Obligations Net Assets Obligations Net
£m £m £m £m £m £m
As at the beginning of the financial year 6,329 (5,598) 731 6,702 (6,012) 690
Interest income/(cost) 337 (297) 40 329 (293) 36
Remeasurement (losses)/gains (10) (255) (265) (448) 415 (33)
Pension scheme expenses (8) - (8) (8) - (8)
Employer contributions 26 - 26 45 - 45
Benefits paid (303) 304 1 (291) 292 1
As at the end of the financial year 6,371 (5,846) 525 6,329 (5,598) 731
20.4 Actuarial assumptions for measuring liabilities
Principal actuarial assumptions
2026 2025
Discount rate 5.55 5.45
Inflation rate - RPI 3.05 3.15
Inflation rate - CPI 2.50 2.55
Future pension increases 1.95 - 2.90 1.95-2.95
Assumptions are on a weighted average blended basis.
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 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 0.55 per cent p.a. up to 2030 (2025: 0.60 per cent p.a.).
c) Future pension increases
Pensions in the Scheme receive various increases in payment depending on the
section of the Scheme and when benefits were built up. For the majority of
benefits, the increases provided are based on either RPI or CPI inflation,
subject to various caps or collars depending on when benefits were built up.
As a result, different assumptions are needed for each type of pension
increase provided and the table above shows the range of assumptions adopted.
d) Mortality
The base mortality assumptions use the SAPS S4 tables for the Sainsbury's and
Argos sections, respectively, with adjustments to reflect the Scheme's
population.
Following the completion of the 2024 triennial valuation and consideration of
the previous three years of mortality experience both in the Scheme and the UK
as a whole, the Company updated 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 2026 year-end are CMI 2024 projections with a
long-term rate of improvement of 1 per cent p.a. Future mortality
improvements for the 2025 year-end were CMI 2023 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 2024 which was released in June 2025.
The CMI have made two main changes to the CMI 2024 model, compared with the
2023 version of the model:
· The CMI 2024 core model has been extended to have five period terms considered
separately during the fitting process rather than one period term. Having
multiple period terms allows the model to better reflect the changing
mortality trends at different age groups observed in the data. Each of the
five age groups is smoothed separately to achieve an overall adjusted target
smoothing factor.
· Modelling the impact of the Covid-19 pandemic using a 'fitted overlay' rather
than using weights as in earlier models. A new half-life parameter has been
introduced which controls this overlay within the model.
A half-life assumption of 0.5 has been adopted for 2025. This is consistent
with the 100 per cent weights parameter which was adopted under CMI 2023 as
both approaches place greater weight on observed post-pandemic mortality
experience than the core CMI parameters.
Life expectancy at age 65
2026 2025
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 20.2 22.6 20.7 18.9 22.2 19.8
Female pensioner 22.5 24.0 23.2 22.8 23.5 22.9
Members aged 45 at balance sheet date
Male pensioner 21.2 23.5 21.7 19.9 23.1 20.7
Female pensioner 23.7 25.1 24.4 24.0 24.6 24.0
21 Contingent liabilities
The Group through the size, nature and scope of its operations and people is
exposed to a wide range of applicable laws and regulation including:
employment related legislation such as the Equality Act 2010 and the Health
and Safety at Work Act 1974; business conduct legislation such as the
Competition Act 1998, the Modern Slavery Act 2015 and the Bribery Act 2010;
product or sales related legislation such as the Food Safety Act 1990 and the
Digital Markets Competition and Consumer Act 2024, and is also exposed to
risks relating to past corporate transactions such as guarantees made in
relation to disposed assets. These expose the Group to potential material
liabilities which may crystallise following events such as civil legal action,
regulatory enforcement action, or under property disposal guarantees in the
event of insolvency of current tenants and their ultimate parents. In
assessing the required disclosure or recognition of potential liabilities, the
Group considers factors including probability, materiality and quantifiability
of any claims received.
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
19,800 equal pay claims from circa 14,100 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 2028. 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 or 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
Subsequent to the balance sheet date, the Group acquired 6,128,749 shares
through the J Sainsbury Employee Share Ownership Trust, for the purpose of
satisfying future share awards under the Group's employee share plans. The
financial liability of £21 million recognised at the balance sheet date has
subsequently been derecognised following the acquisition and settlement of
directly attributable costs.
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 excluding 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 like-for-like.
The measure is used widely in the retail sector.
Reconciliation
2026 2025 (restated*)
Retail like-for-like (exc. Fuel, exc. VAT) 3.9% 3.4%
Underlying net new space impact 0.4% (0.1)%
Retail sales growth (exc. Fuel, exc. VAT) 4.3% 3.3%
Fuel impact (1.5)% (1.6)%
Total Retail sales growth (inc. Fuel, exc. VAT) 2.8% 1.7%
* Retail like-for-like sales APM has been restated to exclude VAT. Refer to
note 2.4 for details.
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 as a whole is viewed from
a management perspective, with finance costs managed for the Group as a whole.
Reconciliation
Calculated as Retail underlying operating profit as a percentage of Retail
sales. Refer to A1.2b).
b) 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
2026 2025
Note £m £m
Retail underlying operating profit 4.1 1,025 1,036
Add: Retail underlying depreciation and amortisation A2.1 1,186 1,156
Retail underlying EBITDA 2,211 2,192
Retail sales 4.1 33,551 32,630
Retail underlying EBITDA margin 6.6% 6.7%
Retail underlying operating margin 3.1% 3.2%
c) 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.
d) 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 9 to the financial statements.
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 and
are disclosed on the face of the income statement.
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
2026
Retail: underlying Retail: non-underlying Retail: total Financial Services Group
£m £m £m £m £m
Cash flows from operating activities - continuing
Operating profit/(loss) - continuing 1,025 (116) 909 (12) 897
Depreciation and amortisation 1,186 52 1,238 - 1,238
Share-based payments and other:
Net impairment charge on non-financial assets 13 10 23 - 23
(Profit)/loss on sale of non-current assets and early termination of (5) 8 3 - 3
leases
Fair value movements 5 7 12 - 12
Share-based payments expense 68 4 72 3 75
Defined benefit scheme expenses - 8 8 - 8
Defined benefit pension scheme payments - (27) (27) - (27)
Operating cash flows before changes in working capital 2,292 (54) 2,238 (9) 2,229
Movements in working capital 128 (53) 75 (117) (42)
Cash generated from/(used in) operations - continuing 2,420 (107) 2,313 (126) 2,187
Interest paid (336) - (336) (12) (348)
Corporation tax paid (112) - (112) 47 (65)
1,972 (107) 1,865 (91) 1,774
Cash flows from investing activities - continuing
Purchase of property, plant and equipment (613) - (613) - (613)
Purchase of intangible assets (230) - (230) - (230)
Capital expenditure (843) - (843) - (843)
Initial direct costs on new leases (8) - (8) - (8)
Proceeds from disposal of property, plant and equipment 41 - 41 - 41
Interest received 23 - 23 - 23
(787) - (787) - (787)
Cash flows from financing activities - continuing
Proceeds from issuance of ordinary shares 20 - 20 - 20
Purchase of own shares for share schemes (64) - (64) - (64)
Intragroup share scheme recharge 7 - 7 (7) -
Other share-related transactions (37) - (37) (7) (44)
Purchase of own shares for cancellation (251) - (251) - (251)
Repayment of borrowings (59) - (59) - (59)
Capital repayment of lease obligations (504) - (504) - (504)
Dividends paid on ordinary shares:
Dividends paid on ordinary shares (excluding special dividends) (316) - (316) - (316)
Special dividend paid (250) - (250) - (250)
(1,417) - (1,417) (7) (1,424)
Intragroup dividend 400 - 400 (400) -
Net increase/(decrease) in cash and cash equivalents - continuing 168 (107) 61 (498) (437)
Net decrease in cash and cash equivalents - discontinued operations - (59) (59) (659) (718)
168 (166) 2 (1,157) (1,155)
Bridge to retail free cash flow
Retail cash flows from operating activities - continuing 1,972 (107) 1,865
Retail cash flows from investing activities - continuing (787) - (787)
Capital repayment of lease obligations (504) - (504)
Retail free cash flow 681 (107) 574
2025 (restated*)
Retail: underlying Retail: non-underlying Retail: total Financial Services Group
£m £m £m £m £m
Cash flows from operating activities - continuing
Operating profit/(loss) - continuing 1,036 (214) 822 68 890
Depreciation and amortisation 1,156 59 1,215 - 1,215
Share-based payments and other: -
Net impairment charge/(reversal) on non-financial assets 2 20 22 - 22
Profit on sale of non-current assets and early termination of leases (6) (47) (53) - (53)
Fair value movements - (2) (2) - (2)
Share-based payments expense 71 - 71 2 73
Defined benefit scheme expenses - 8 8 - 8
Defined benefit pension scheme payments - (45) (45) - (45)
Operating cash flows before changes in working capital 2,259 (221) 2,038 70 2,108
Movements in working capital 98 105 203 (1,097) (894)
Cash generated from/(used in) operations - continuing 2,357 (116) 2,241 (1,027) 1,214
Interest paid (347) - (347) (12) (359)
Corporation tax paid (89) - (89) 36 (53)
1,921 (116) 1,805 (1,003) 802
Cash flows from investing activities - continuing
Purchase of property, plant and equipment (617) - (617) - (617)
Purchase of intangible assets (208) - (208) - (208)
Capital expenditure (825) - (825) - (825)
Initial direct costs on new leases (34) - (34) - (34)
Proceeds from disposal of property, plant and equipment 45 - 45 - 45
Interest received 27 - 27 - 27
(787) - (787) - (787)
Cash flows from financing activities - continuing
Proceeds from issuance of ordinary shares 20 - 20 - 20
Purchase of own shares for share schemes (63) - (63) - (63)
Other share-related transactions (43) - (43) - (43)
Purchase of own shares for cancellation (200) - (200) - (200)
Proceeds from borrowings 544 - 544 - 544
Repayment of borrowings (623) - (623) - (623)
Net repayment of borrowings (79) - (79) - (79)
Capital repayment of lease obligations (487) - (487) - (487)
Dividends paid on ordinary shares (308) - (308) - (308)
(1,117) - (1,117) - (1,117)
Net increase/(decrease) in cash and cash equivalents - continuing 17 (116) (99) (1,003) (1,102)
Net (decrease)/increase in cash and cash equivalents - discontinued - (52) (52) 1,397 1,345
operations
17 (168) (151) 394 243
Bridge to retail free cash flow
Retail cash flows from operating activities - continuing 1,921 (116) 1,805
Retail cash flows from investing activities - continuing (787) - (787)
Capital repayment of lease obligations (487) - (487)
Retail free cash flow 647 (116) 531
* Refer to note 2.1 (b) and (c) for details of prior year restatements.
A2.2 Non-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
2026 2025
Note £m £m
Defined benefit pension scheme payments A2.1 (27) (45)
Non-underlying cash movements:
Retail restructuring programmes (72) (71)
Other (8) -
Operating cash flows (80) (71)
Effect on Retail cash generated from operations (107) (116)
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. 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
Retail net debt divided by Group underlying EBITDA based on a 52-week rolling
basis.
Helps management measure the ratio of the business' debt to operational cash
flow.
Reconciliation
2026 2025
Note £m £m
Retail net debt 18 5,743 5,758
Group underlying EBITDA A4.2 2,211 2,222
Net debt/Group underlying EBITDA 2.6x 2.6x
Group underlying EBITDA is reconciled within the fixed charge cover analysis
in note A4.2.
Comparatives are as originally reported.
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 retail net debt. The average is calculated on a 14-point basis which uses
the average of 14 data points, representing the previous 13 period ends and
the opening position.
Represents the total capital that the Group has utilised in order to generate
profits. Management uses this to assess the performance of the business.
Reconciliation
Net debt as set out in note 18.
2026 2025
Note £m £m
Return (Group underlying operating profit) 4.1 1,025 1,066
£m £m
Group net assets Balance sheet 6,150 6,651
Less: Net pension surplus (525) (731)
Deferred tax on pension surplus 194 218
Less: retail net debt 18 5,743 5,758
Effect of in-year averaging (17) (42)
Capital employed 11,545 11,854
Return on capital employed 8.9% 9.0%
Comparatives are as originally reported.
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. 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
2026 2025
Note £m £m
Group underlying operating profit 4.1 1,025 1,066
Add: Group underlying depreciation and amortisation expense A2.1 1,186 1,156
Group underlying EBITDA 2,211 2,222
Repayment of capital element of lease obligations A2.1 (504) (487)
Underlying finance income 6 24 31
Underlying finance costs 6 (331) (336)
Fixed charges (811) (792)
Fixed charge cover 2.7x 2.8x
Comparatives are as originally reported.
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