Strong Interim Performance At Sainsbury's

J Sainsbury plc has published interim results for the 28 weeks ended 18 September 2021, advising of a, 'strong performance with market share gains as we put food back at the heart of Sainsbury's'. 

Financial Highlights

• Grocery sales grew by 0.8 per cent versus H1 20/21 and 9.1 per cent versus H1 19/20 and we gained market share, driven by improved value, innovation and service, supported by customers continuing to eat at home more
  
  
• General Merchandise sales reduced by 5.8 per cent versus H1 20/21, as expected against strong lockdown and seasonal sales comparatives, but grew 1.1 per cent versus H1 19/20
  
  
• Strong digital sales of £5.8 billion, consistent with H1 20/21 at 39 per cent of retail sales
  
  
• Statutory Group sales (excluding VAT) up 5.3 per cent, with fuel sales up 62.7 per cent
  
  
• Underlying profit before tax of £371 million, up 23 per cent versus H1 20/21¹. Up 56 per cent versus H1 19/20, reflecting higher grocery sales and effective cost reduction programmes, particularly at Argos
  
  
• Statutory profit before tax of £541 million reflects significantly lower restructuring and impairment costs versus H1 20/21 and £181 million of exceptional income from settling legal disputes
  
  
• Strong retail free cash flow of £554 million¹. On track to meet free cash flow and net debt reduction targets
  
  
• Interim dividend of 3.2 pence
  
  
• We continue to expect to report underlying profit before tax of at least £660 million in the financial year to March 2022 

Strategic highlights

• Food First: Good progress against the plan we set out last November to put food back at the heart of Sainsbury's
  
  - Value: Significantly improved versus competitors, driving sales, market share and switching gains
  
  - Innovation: On track to triple the number of new products this year; new lines very popular with customers
  
  - Customer Service: Maintained strong customer satisfaction scores with supermarket scores ahead of key competitors². Investing to improve our Groceries Online customer offer and improve productivity, attracting more customers and gaining market share; sales are up 13 per cent this year and 128 per cent over the past two years
  
  
• Brands that Deliver: Nectar, Argos, Habitat, Tu and Sainsbury's Bank are clearly focused on supporting the core food business and delivering for customers and shareholders
  
  - Continuing to transform Argos, significantly reducing the cost base and improving the customer offer
  
  - Relaunched the iconic Habitat brand and introduced Habitat Kids
  
  - Tu clothing sales grew strongly, helped by increased full price sales. Clothing online sales remain strong
  
  - Grown digital Nectar to over 8 million customers and launched My Nectar Prices, currently offering customers approximately 95 million personalised discounts and promotions every week
  
  - Financial Services returned to profit; strong capital position

• Save to invest: Three-year structural cost reduction programme on track to reduce retail operating costs to sales ratio of at least 200 basis points
  
  
• Plan for Better: Ahead of our trajectory to become net zero in our own operations no later than 2040 and accelerated this commitment to 2035 ahead of the COP26 summit in Glasgow, where we are a Principal Partner 

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

"We are making good progress delivering our plan to put food back at the heart of Sainsbury's. We have grown market share through improving value for customers, tripling our rate of food innovation and delivering customer satisfaction ahead of our key competitors. 

"Whilst customers are returning to many pre-pandemic shopping habits, online sales have remained very strong and we continue to grow market share. At the same time, our plan to transform Argos is on track, delivering significantly improved profitability. 

"I'm really proud of my colleagues for the outstanding job they continue to do for our customers in such exceptional circumstances. Our teams have worked tirelessly over the past eighteen months and to say thank you we are closing all Sainsbury's and Argos stores on Boxing Day this year to give colleagues an extra day to spend with friends and family. 

"We are proud to be the Principal Supermarket Partner of COP26 and are accelerating our carbon reduction ambitions and will now reach net zero in our own operations by 2035. 

"Our industry faces labour and supply chain challenges. However our scale, advanced cost saving programme, logistics operations and strong supplier relationships put us in a good position as we head into Christmas. I would like to thank all my colleagues and all our suppliers for their hard work, commitment and dedication in the weeks ahead to ensure we deliver the best possible Christmas for our customers."   

Outlook

The business performed well through the first half, benefiting from higher in-home grocery consumption and outperforming grocery competitors, while general merchandise sales declined, as expected, against an exceptionally strong period last year. Against further strong comparatives in the second half of the year we continue to expect customer behaviour to normalise and grocery growth to moderate and we will continue to invest to further improve our value position. We are well placed to deal with a backdrop of global supply challenges and a tight labour market, with scale, strong supplier relationships and a well-developed and accelerating cost saving programme. We continue to expect to report underlying profit before tax of at least £660 million in the financial year to March 2022 and reduce non-lease net debt by at least £950 million³ by March 2023, generating average retail free cash flow of at least £500 million per year over the three years to March 2025.

Source : Sainsbury's

Image : yujie chen / iStockphoto.com (325960422)

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