TIDMSBRY
RNS Number : 2398E
Sainsbury(J) PLC
06 July 2021
6 July 2021
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
J Sainsbury plc
First Quarter Trading Statement for the 16 weeks to 26 June
2021
Sales ahead of expectations; strategy delivering market share
gains
-- Q1 like-for-like sales up 1.6 per cent (excl. fuel)
-- Total retail sales up 1.6 per cent (excl. fuel), two-year growth 10.3 per cent
-- Grocery sales up 0.8 per cent, two-year growth 11.3 per cent
-- Groceries Online sales up 29 per cent, two-year growth 142 per cent
-- General Merchandise sales down (1.4) per cent, two-year growth 5.6 per cent
-- Clothing sales up 57.6 per cent, two-year growth 15.5 per cent
-- Reinvesting benefits of stronger sales growth and now expect
underlying profit before tax of at least GBP660m(1)
Summary and Outlook
Sales of Grocery, General Merchandise and Clothing were all
higher than our expectations throughout the quarter. Grocery sales
benefited from higher in-home consumption due to continued COVID-19
restrictions. In addition, we continued to outperform competitors
and grow market share, reflecting improved value, more innovation
and better customer service as we make strong progress in putting
food back at the heart of Sainsbury's. General Merchandise sales
were lower than last year's elevated levels but ahead of our
expectations, despite global supply challenges which are likely to
continue for the remainder of the year.
We are using some of the profit benefit of our sales
outperformance to accelerate our investment plans across the
customer offer, particularly to further improve our value position.
Yesterday we announced an additional GBP50 million investment in
targeted price reductions focused on the centre of the plate and
everyday essentials. We also have further tough comparables ahead
as restrictions continue to ease and customer behaviour normalises.
However, we now expect to report underlying profit before tax of at
least GBP660 million in the financial year to March 2022, with
progress weighted towards the first half.
2021/22 2021/22
-----------------
Total sales growth Q1 YoY Q1 Yo2Y Like-for-like sales growth Q1 YoY
---------------------------------- ------- -------- --------
Like-for-like sales (excl.
Grocery 0.8% 11.3% fuel) 1.6%
------- -------- --------
Like-for-like sales (incl.
Total General Merchandise (1.4%) 5.6% fuel) 8.4%
------- -------- --------------------------- --------
GM (Argos) (3.7%) 6.7%
------- --------
GM (Sainsbury's Supermarkets) 11.2% 0.9%
------- --------
Clothing 57.6% 15.5%
------- --------
Total Retail (excl. fuel) 1.6% 10.3%
------- --------
Simon Roberts, Chief Executive of J Sainsbury plc, said:
"We continue to make good progress against our plan to put food
back at the heart of Sainsbury's and have good momentum within the
business. Our colleagues are doing a brilliant job of giving great
customer service and continuing to adapt as restrictions ease and
shopping habits change. Over the coming months we expect to see
customer shopping patterns normalise further and we are well set up
to serve them however they want to shop.
"We are focused on offering our customers even better value and
regularly creating new and exciting products for them to try. From
today we are reducing prices by GBP50 million on everyday products
from strawberries and cherries to bacon and potatoes, helping
customers make the most of this summer. I'm delighted that
customers are responding to the changes we are making and that we
are growing our market share.
"Our recent launch of Helping Everyone Eat Better will help
customers find great tasting food that is good for them and also
good for the planet, an important step on our journey to reduce our
impact on the environment".
Strategic and operational highlights
Food First
We have made good progress throughout the quarter, building on
last year's strong momentum and growing Grocery sales year-on-year
despite exceptionally tough comparatives. As part of our plan to
put food back at the heart of Sainsbury's, we have given customers
better value groceries through Sainsbury's Quality, Aldi Price
Match and have increased our speed of innovation. We are on track
to launch 1,900 lines this year, introducing 277 new lines in the
quarter.
We are actively encouraging customers to choose food that is
better for them and better for the planet through our Helping
Everyone Eat Better campaign. We launched our second Nectar 'Great
Big Fruit and Veg Challenge', which rewards customers for buying
more fruit and vegetables. We have also introduced a new target for
over 83 per cent of our food sales to be healthy or better for you
by 2025. We are proud to be working with the government on this as
the Principal Supermarket Partner for COP26 in Glasgow in
November.
As restrictions continue to ease, customers are beginning to
return to more normal shopping patterns, with online demand
reducing gradually from peak levels and transaction numbers
increasing in stores. However, online remains very popular,
accounting for 18 per cent of our Grocery sales this quarter
against eight per cent in the first quarter of 2019/20. We are
encouraged by the number of customers who shopped online with
Sainsbury's for the first time during the pandemic who have become
loyal customers, shopping online and instore. We continue to gain
online market share from our competitors(2) .
Market share gains and improving customer satisfaction:
-- We outperformed the grocery market and all of our superstore
competitors on a value and volume growth basis, over one and two
years(3)
-- Customer satisfaction scores continued to improve and moved
further ahead of all of our superstore competitors(4)
Improving real and perceived value for money:
-- We are seeing encouraging early results from our Sainsbury's
Quality, Aldi Price Match campaign, with the 'halo' sales benefit
across the rest of the basket exceeding expectations and we have
added more lines in the quarter, with a focus on fresh fruit and
vegetables. Our Value Index has improved against Aldi
quarter-on-quarter
-- This progress has been reflected in customer satisfaction
scores on Value for Money increasing by four percentage points
year-on-year
-- Our latest Price Lock commitment covers over 2,300 everyday
products and we committed to an additional GBP50 million of price
reductions yesterday across 60 everyday essentials
Increasing the speed of innovation:
-- We are on track to meet our target of tripling the rate of
product innovation year-on-year. We launched 277 new lines in the
quarter, over 200 of which were in our Summer Editions range
-- The relaunch of our significantly expanded Meal Deal has
proved very popular with customers, with sales ahead of
expectations and Meal Deal customer numbers doubling post
launch
Growing Online capacity and extending routes to market:
-- Groceries Online order numbers have reduced gradually from
peak levels as more customers feel comfortable returning to
shopping in stores but demand remains high. Sales were up 29 per
cent year-on-year during the quarter and up 142 per cent on a
two-year basis
-- Customer satisfaction in Online strengthened, outperforming
all of our superstore competitors during the quarter and we
continue to gain online market share
-- Productivity of online fulfilment continues to improve; item
picking rates (IPH) increased 42 per cent year on year and 11 per
cent on a two-year basis
-- On Demand sales continue to grow and surpassed expectations.
Our 60-minute delivery service Chop Chop is now available in 49
stores and Uber Eats and Deliveroo are now in 230 stores, an
addition of 42 stores in the quarter
Expanding physical points of distribution and adapting
supermarket formats:
-- Our Convenience business continues to recover as lockdown
eases and customers return to city centres. Total sales were up
year-on-year, driven by recovery in our urban convenience stores
and Food on the Move stores
-- Our trial with Carluccio's is progressing well and customers
are enjoying a Caffè Carluccio's in our St Albans supermarket and a
Carluccio's counter in our Leamington Spa supermarket
-- We added three more Neighbourhood Hub stores during the quarter, bringing the total to seven
Brands that Deliver
-- Argos sales were up 6.7 per cent on a two-year basis, ahead
of expectations and guidance, although down year-on-year against
exceptionally tough comparatives of the Spring 2020 lockdown when
many competitors were closed and good weather brought forward
seasonal sales
-- Home and Furniture sales were strong, boosted by the
transition to the Habitat brand and good performance in bedroom and
upholstery categories, offset by declines in some categories that
performed exceptionally well during lockdown last year such as
laptops, TVs, toys, office furniture and outdoor and seasonal
products. Global supply challenges have also limited customer
choice in a number of areas
-- In June we launched our new Argos brand commitment, "Ready
For All Life's Moments". The new campaign is all about helping
customers feel ready to get the most out of life and will broaden
the brand's appeal by focussing on desirable, stylish products, top
brands and the compelling reasons to shop with Argos
-- Sainsbury's General Merchandise performed well, with
double-digit sales growth driven by gifting, events and
homeware
-- Tu clothing has recovered strongly. Sales were up 57.6 per
cent year-on-year and full price sales up 95 per cent, with strong
growth in seasonal and womenswear ranges. We gained market share on
both a value and volume basis(5)
-- The Nectar Avios partnership with British Airways has landed
well with good levels of customer engagement and the number of
digital Nectar app users continues to grow
-- Financial Services has seen a recovery in consumer demand for
credit in the quarter, particularly cards and loans, albeit still
below pre-COVID-19 levels, and we remain confident in our prudent
provisioning levels and our strong capital position
Save to Invest
-- We are on track to reduce our retail operating costs to sales
ratio by more than 200 basis points by 2023/24, delivering major
structural cost savings to fund investment in our core customer
offer
-- We are making good progress with our Argos transformation
programme. Our cost reduction programme is on track and we opened
our first Local Fulfilment Centre in Bristol in June - a key
milestone in creating the new fulfilment model
-- We opened 20 Argos stores inside Sainsbury's supermarkets in
the quarter bringing the total to 356 and closed 14 Argos
standalone stores bringing the total to 387
-- In supply chain and logistics, we continue to make progress
in delivering the transformation of our UK-wide network to deliver
structural cost savings, including previously announced depot
consolidation
Plan for Better
-- We held an ESG event on 17th June where we set out our Plan
for Better targets. Further details can be found at:
https://www.about.sainsburys.co.uk/investors/results-reports-and-presentations
-- We have recently announced that 520 Sainsbury's stores will
offer a recycling system for all flexible plastics and we are the
largest supermarket to offer a recycling service of this scale
Detailed sales information
2020/21 2021/22
--------------------
Q1 Q2 Q3 Q4 Q1 YoY Q1 Yo2Y(6)
---------------------------------- -------- -------- -------- -------- ------- -----------
Like-for-like sales
growth
-------- -------- -------- -------- ------- -----------
Like-for-like sales (excl.
fuel) 8.2% 5.1% 8.6% 11.3% 1.6%
-------- -------- -------- -------- ------- -----------
Like-for-like sales (incl.
fuel) (2.3%) (0.5%) 3.2% 3.2% 8.4%
-------- -------- -------- -------- ------- -----------
Total sales growth
-------- -------- -------- -------- ------- -----------
Grocery 10.5% 5.1% 7.4% 7.1% 0.8% 11.3%
-------- -------- -------- -------- ------- -----------
Total General Merchandise 7.2% 7.6% 6.0% 17.6% (1.4%) 5.6%
-------- -------- -------- -------- ------- -----------
GM (Argos) 10.7% 10.9% 8.4% 18.1% (3.7%) 6.7%
-------- -------- -------- -------- ------- -----------
GM (Sainsbury's Supermarkets) (9.3%) (6.9%) (5.4%) 14.8% 11.2% 0.9%
-------- -------- -------- -------- ------- -----------
Clothing (26.7%) (7.5%) 0.4% 4.2% 57.6% 15.5%
-------- -------- -------- -------- ------- -----------
Total Retail (excl. fuel) 8.5% 5.2% 6.8% 9.2% 1.6% 10.3%
-------- -------- -------- -------- ------- -----------
Fuel (56.1%) (29.3%) (29.0%) (38.5)% 95.1% (14.4%)
-------- -------- -------- -------- ------- -----------
Total Retail (incl. fuel) (2.1%) (0.4%) 1.7% 1.6% 8.5% 6.2%
---------------------------------- -------- -------- -------- -------- ------- -----------
1 28 April 2021: "Comfortable with consensus forecasts of around
GBP620 million"
2 NielsenIQ Panel, Total FMCG excl. Kiosk & Tobacco, 12
weekly data to 29 May 2021, Market Universe - Total Outlets
3 NielsenIQ Panel volume growth YoY and Yo2Y. Total FMCG
(excluding Kiosk & Tobacco), 12 weeks to 19 June 2021, 2020 and
2019. Market Universe: Total Outlets
4 Competitor benchmarking survey, Supermarkets and Groceries
Online. Rolling 12 weekly scores, Mar-Jun 2021 data
5 Kantar 24 week Total Clothing, Footwear & Acc. Volume
share data to 30 May 21
6 Q1 21/22 vs Q1 19/20
Tim Fallowfield, Company Secretary and Corporate Services
Director, was responsible for the disclosure of this
announcement.
Investor Relations Enquiries
James Collins +44 (0) 20 7695 0080
Media Enquiries
Rebecca Reilly +44 (0) 20 7695 729
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 conference call will take place at 08:15. To listen to the
audio webcast we recommend that you register in advance. To do so,
please visit
https://www.about.sainsburys.co.uk/investors/results-reports-and-presentations
prior to the event and follow the on-screen instructions. A
transcript will be available following the conference call.
Sainsbury's will announce its FY21/22 Interim Results on 4
November 2021.
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END
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