TIDMSBRY
RNS Number : 1673Z
Sainsbury(J) PLC
10 January 2024
10 January 2024
Third Quarter Trading Statement for the 16 weeks to 6 January
2024
Grocery volume growth driving continued market
outperformance
Trading Highlights
More customers are doing more of their grocery shopping at
Sainsbury's. We have outperformed the market every week of this
financial year and delivered volume growth ahead of the market for
a fourth consecutive Christmas. This reflects consistently great
value and service, a positive customer response to our first Nectar
Prices Christmas and customers trading up to Taste the Difference.
While Argos outperformed a weak and highly promotional general
merchandise market, sales declined ahead of Christmas against an
exceptionally strong performance last year.
-- Q3 Grocery sales up 9.3%, Christmas Grocery sales up 8.6%,
with stronger volume growth offsetting lower inflation
-- Q3 General Merchandise sales down (0.6)%, up 1.5% excluding
impact of Argos closure in the Republic of Ireland
-- Christmas General Merchandise sales down (3.7)%, (1.3)%
excluding impact of Argos closure in the Republic of Ireland,
reflecting significant benefit to sales last year from the postal
strike and strong demand for energy saving products
-- Q3 Clothing sales down (1.7%), Christmas Clothing sales (6.0)%
-- Q3 retail (exc. fuel) sales up 6.5%. Like-for-like sales
growth up 7.4%. Inc. fuel retail sales up 4.4% with fuel sales down
(7.2)%
-- Outlook: We continue to expect underlying profit before tax
in 2023/24 of between GBP670 million and GBP700 million, with a
strong Grocery performance offsetting weaker General Merchandise
and Financial Services contributions. We continue to expect to
generate retail free cash flow in 2023/24 of at least GBP600
million
YoY Sales Growth
---------------------------------------
Total sales performance Q3 Christmas
16 weeks to 6 weeks to
6 Jan 24 6 Jan 24
------------- ------------
Grocery 9.3% 8.6%
------------- ------------
General Merchandise* (0.6)%* (3.7)%*
------------- ------------
Argos (0.9)% (4.2)%
------------- ------------
Sainsbury's GM 0.9% (0.9)%
------------- ------------
Clothing (1.7)% (6.0)%
------------- ------------
Total Retail (exc. fuel) 6.5% 4.9%
------------- ------------
Like-for-like sales (exc. fuel) 7.4%
------------- ------------
* General Merchandise sales excluding the impact of the closure
of Argos stores in the Republic of Ireland were up 1.5% in the 16
weeks to 6 January 2024 and down (1.3)% in the 6 weeks to 6 January
2024
Simon Roberts, Chief Executive of J Sainsbury plc, said:
"We've worked hard to really deliver for our customers this
quarter and have grown grocery volumes ahead of the market for the
fourth Christmas in a row. More customers are choosing to shop at
Sainsbury's, recognising our determined focus on value, product
innovation and service.
"This was our first Christmas powered by Nectar Prices, helping
customers save an average of GBP16 on an GBP80 Christmas shop. We
delivered our best ever value Christmas roast and customers bought
record numbers of pigs in blankets, mince pies and sparkling wine.
Taste the Difference sales grew ahead of the market as families
treated themselves.
"Across the quarter, Argos performed ahead of competitors in a
highly promotional market. Argos delivered a strong Black Friday
performance but a weaker Christmas against an exceptional
performance last year.
"Our success is down to our entire team who consistently deliver
market leading customer service. I'd like to thank every one of my
colleagues and am pleased we will be kicking off the new financial
year with an industry leading pay increase, investing a record
GBP200 million to continue to pay the Real Living Wage across the
country.
"We enter 2024 with strong momentum and next month we will share
our updated strategy, building on all we've done to put food back
at the heart of Sainsbury's over the last three years. There is a
lot to be excited about and we remain absolutely committed to
deliver for our customers, colleagues and shareholders."
Strategic Highlights
Food First : Our consistent focus on delivering great value,
innovation, quality and service has driven sustained sales growth
despite significantly lower inflation, with volume growth ahead of
the market every week since March.(1)
Value:
-- Customers continue to recognise the consistent improvement of
our value offer, with our prices improving again versus competitors
through the quarter(2) , supported by Nectar Prices on more than
6,000 products. For the first time we offered our festive roast
through Nectar Prices, feeding six for less than GBP3 per person -
our best value ever
-- Nectar participation reached 90 per cent on an GBP80 weekly
shop during the quarter with Nectar Prices helping customers to
save GBP16 on average during Christmas week
-- Our focus on fresh food really delivered over Christmas: we
grew volumes ahead of the market across the full basket,
outperforming in Meat, Fish, Poultry, Dairy, Fruit and
Vegetables(3)
-- We donated every penny that customers spent on festive
vegetables to Comic Relief through our Nourish the Nation
partnership. We have donated GBP6 million through our community
initiatives this quarter, helping to tackle food poverty(4)
-- We've expanded Aldi Price Match this January to be bigger
than ever, including more than 550 essential everyday products
Innovation:
-- We launched over 370 new products this quarter including more
than 170 Taste the Difference products for Christmas. Standout new
products included our Taste the Difference Baos of Holly, Dry Cured
Gammon with Wildflower Honeycomb and Home for Christmas chocolate
dessert
-- We outperformed the premium food market(5) and Taste the
Difference sales were up 13 per cent in the quarter as customers
treated themselves at home
-- We sold record volumes of Taste the Difference cheese in
Christmas week, reflecting investments in range, quality and
enhanced displays in many stores
-- We continue to innovate in packaging and recently announced
we're switching our mushroom punnets from plastic to cardboard.
This will save over 775 tonnes of plastic per year - our biggest
ever single product plastics removal
Service:
-- The strength of our grocery performance reflected excellent
end to end execution, close relationships with our suppliers and
outstanding customer service in the lead up to Christmas. Product
availability improved significantly from investment in AI-driven
demand forecasting technology. This also resulted in smoother
stockflows into stores, benefitting productivity
-- Our customer satisfaction scores are consistently ahead of
full-choice competitors, with leading scores on the things that
matter most to customers: quality, product availability, range,
appealing offers, colleague availability and speed of
checkout(6)
-- Last week we announced our decision to invest GBP200 million
to offer a leading rate of pay for our colleagues, increasing the
base rate for retail colleagues to GBP12.00 per hour nationally and
GBP13.15 per hour in London from March. This is our biggest single
investment into colleague pay and represents an increase of 50 per
cent over six years
-- Our focus on service in Groceries Online delivered improved
customer satisfaction(7) and more customers trusted us to deliver
their Christmas shop this year. We made it easier for customers to
plan ahead by releasing our Christmas home delivery slots in one go
and extending our delivery window on Christmas Eve
-- We have worked hard to deliver great fresh food availability
for customers while reducing the levels of unsold food in store. In
line with our commitment that no good food goes to waste, we have
donated more than four million meals through our front of store
donation programme and our partnership with Neighbourly. We have
also committed to donating a further one million fresh meals this
Winter as part of the Coronation Food Project
Brands that Deliver: Argos outperformed(8) a highly promotional
general merchandise market over the quarter. Excluding the impact
of the closure of stores in the Republic of Ireland, Q3 sales
increased 1.7 per cent, as customers chose Argos for desirable
brands, impactful deals, strong availability and convenience.
However, sales were weaker ahead of Christmas against an
exceptional performance last year when we benefitted significantly
from the postal strike and from strong demand for energy saving
products.
-- We performed strongly over the Black Friday period with
customers looking to buy earlier for Christmas, particularly in
Furniture, Electronics and Toys categories
-- Tu clothing regained some momentum in a market that remains
highly promotional, partially reflecting unseasonably warm weather,
particularly over Christmas. Partywear and family Christmas pyjamas
were popular with customers
-- Financial Services performance continues to be impacted by
net interest margin compression, as we are not fully passing on
higher funding costs on bank deposits to customers
Like-for-like 2022/23 2023/24 YoY 2023/24 YoY exc.
sales performance Argos ROI
----------------------------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3
------- ------ ------- -------- -------- -------- ------- -------
Like-for-like
sales (excl. fuel) (4.0)% 3.7% 5.9% 7.8% 9.8% 6.6% 7.4% 10.0% 6.6% 7.4%
-------- ------- ------ ------- -------- -------- ------- -------- ------- -------
Like-for-like
sales (incl. fuel) 2.9% 7.7% 6.8% 5.9% 3.9% 2.2% 5.3% 4.0% 2.2% 5.3%
-------- ------- ------ ------- -------- -------- ------- -------- ------- -------
Total sales performance 2022/23 2023/24 YoY 2023/24 YoY exc.
Argos ROI(9)
---------------------------------- --------------------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3
-------- -------- -------- ------- ------- -------
Grocery (2.4)% 3.8% 5.6% 7.4% 11.0% 8.9% 9.3% 11.0% 8.9% 9.3%
-------- ------- ------ ------- -------- -------- ------- -------- ------- -------
Total General
Merchandise (11.2)% 1.2% 4.6% 7.6% 4.0% (2.6)% (0.6)% 4.9% (0.6)% 1.5%
-------- ------- ------ ------- -------- -------- ------- -------- ------- -------
GM (Argos) (10.5)% 1.6% 4.5% 9.3% 5.1% (2.6)% (0.9)% 6.1% (0.1)% 1.7%
-------- ------- ------ ------- -------- -------- ------- -------- ------- -------
GM (Sainsbury's) (14.6)% (1.3)% 5.4% (1.0)% (1.2)% (2.7)% 0.9% (1.2)% (2.7)% 0.9%
-------- ------- ------ ------- -------- -------- ------- -------- ------- -------
Clothing (10.1)% (0.2)% 1.3% (1.9)% (3.7)% (14.6)% (1.7)% (3.7)% (14.6)% (1.7)%
-------- ------- ------ ------- -------- -------- ------- -------- ------- -------
Total Retail
(excl. fuel) (4.5)% 3.1% 5.2% 7.1% 9.2% 5.8% 6.5% 9.3% 6.2% 7.1%
-------- ------- ------ ------- -------- -------- ------- -------- ------- -------
Fuel 48.3% 29.1% 12.2% (2.8)% (21.4)% (17.1)% (7.2)% (21.4)% (17.1)% (7.2)%
-------- ------- ------ ------- -------- -------- ------- -------- ------- -------
Total Retail
(incl. fuel) 2.5% 7.2% 6.2% 5.4% 3.3% 1.5% 4.4% 3.5% 1.9% 4.9%
-------- ------- ------ ------- -------- -------- ------- -------- ------- -------
Notes
Certain statements made in this announcement are forward-looking
statements. Such statements are based on current
expectations and are subject to a number of risks and
uncertainties that could cause actual events or results to
differ
materially from any expected future events or results referred
to in these forward-looking statements. Unless otherwise
required by applicable law, regulation or accounting standard,
we do not undertake any obligation to update or revise
any forward-looking statements, whether as a result of new
information, future developments or otherwise.
A webcast presentation and live Q&A will be held at 9:15
(GMT). This will be available to view on our website at the
following link:
https://sainsbury-q3-trading-statement-2023-24-analyst-q-a-call-jan-24.open-exchange.net/registration
A recorded copy of the webcast and Q&A call, alongside
slides and a transcript of the presentation will be available at
www.about.sainsburys.co.uk/investors/results-reports-and-presentations
following the event.
Sainsbury's will host its Strategy Update on 7 February
2024.
Sainsbury's will announce its Preliminary Results for the year
ending 2 March 2024 on 25 April 2024.
Enquiries
Investor Relations Media
James Collins Rebecca Reilly
+44 ( 0) 7801 813 074 +44 (0) 20 7695 7295
1. Nielsen EPOS data - Sainsbury's weekly volume growth
differential to market. Weekly data from 5 March to 30 December
2023
2. Value Reality, Q3 2023/24 versus Q3 2022/23; Acuity, internal
modelling
3. Nielsen EPOS YoY unit growth: Sainsbury's growth vs Total
Outlets growth. 4 weeks to 23 December 2023
4. Nourish the Nation Q3 donation providing support to
long-standing partner Comic Relief, key food redistribution
partners and local charities
5. Kantar Worldpanel - Premium tier volume performance 12 weeks
to 24 December 2023
6. Competitor benchmarking survey. Q3 2023/24 Supermarket CSAT
scores 12 weeks to 9 December 2023
7. Competitor benchmarking survey. Q3 YoY Groceries Online CSAT
scores 12 weeks to 9 December 2023 versus 12 weeks to 10 December
2022
8. BRC data, 3 months to 30 December 2023. Argos differential,
Total NFNC (exc. H&B & stationery) sales
9. General Merchandise sales excluding the impact of the closure
of Argos stores in the Republic of Ireland in the 6 weeks to 6
January 2024 were down (1.3)% (Argos sales down (1.4)%, Total
Retail exc. fuel sales up 5.5%)
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END
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