Highlights:
* Delivering greater value for customers, colleagues, communities and shareholders
* Preliminary Results for the 52 weeks ended
* Delivering greater value for customers, colleagues, communities and shareholders
Two years into our Food First plan, we are a fundamentally stronger business. We have made bold choices to reduce costs, make Argos and Tu more profitable and resilient, grow profits at Nectar and strengthen our balance sheet. We have reinvested the benefits in our food business, prioritising value, customer service and innovation, which is driving improved market share performance1. This has also given us the financial flexibility to make balanced choices, investing to help customers and colleagues, while also delivering results at the top end of expectations.
Financial highlights
Retail sales up 5.2%, ex. fuel sales up 2.0%.
Grocery sales up 3.0%, driven by inflation and improved market share performance. Q4 grocery sales up 7.4%
General Merchandise (GM) sales down 0.4%, with Argos gaining share in a weak general merchandise market. Q4
Underlying profit before tax of
Statutory profit before tax of
Retail free cash flow
Year end net funds, excluding leases, of
Underlying earnings per share
Proposed final dividend of
Outlook: At this early stage of the year, we expect UPBT between
'We are two years into our plan to put food back at the heart of Sainsbury's and have focused our efforts on reducing costs right across the business, which has enabled us to make the right decisions for our colleagues and customers. At the same time, we have improved the performance and profitability of Argos, Tu, Nectar and Financial Services so that we can invest further in the areas that customers and colleagues care about most.
'Our colleagues do a fantastic job serving our customers every day and we know that they are also dealing with the impact of the rising cost of living. That's why, over the last 12 months, we took the decision to invest
'We continue to work closely with our suppliers and farmers and I am grateful for their support in what has been another difficult year for food supply chains. We know just how vital the agriculture industry is not only to Sainsbury's, but to the country as a whole and this is why we have made the choice to give
'We made these very deliberate decisions and investments because they make our business stronger, but more importantly because they are simply the right thing to do. While there is still much to be done and there is no doubt that the year ahead will remain challenging, I'm confident we will continue to deliver for our customers, colleagues, communities and shareholders.'
Strategic highlights
Food First: Customers want low prices, exciting new products and great customer service. This is where we are focusing our time, energy and investment and is why more customers are choosing to shop with us2. We have:
Invested over
Launched Nectar Prices, offering discounts to every Nectar customer in supermarkets and online, building on Your Nectar Prices which offers personalised discounts. The most active Your Nectar Prices users are saving almost
Exceeded our innovation target and launched more Taste the Difference products, helping to win market share around big events5 as customers increasingly celebrate at home
Invested record amounts to increase colleague pay, provide free food and improve discount, driving up colleague and customer satisfaction scores
Brands that Deliver: We have significantly improved profitability across our brands, creating
Grown our Nectar digital users to 11 million and now have over 18 million Nectar members. Nectar360 is on track with its plan to deliver at least
Transformed the Argos sales and cost base, making the business considerably more profitable and more competitive than pre-pandemic. Argos has gained market share7 in a weak general merchandise market
Launched more Habitat partnerships with third-party designers and delivered value market share gains in a number of homeware categories8
Grown full-price sales to now make up 80 per cent of our Clothing sales, up 15 percentage points versus pre-pandemic whilst also extending our range of third party clothing brands to offer more choice and convenience
Save to Invest: We are making tough but necessary decisions to simplify, prioritise and partner right across the business. These create cost savings that fuel investments in price, innovation and customer service. We have:
Delivered more than
Reduced our operating cost to sales ratio further, now 97 basis points lower than FY2019/20 despite significantly higher than anticipated operating cost inflation. Productivity improvements have driven a reduction in our labour cost to sales ratio despite significant investment in colleague wages
Plan for Better: We are committed to playing a leading role in offering affordable high quality food that supports healthy and sustainable diets and helps customers reduce their impact on the planet. We have:
Reduced absolute greenhouse gas (GHG) emissions within our operations to 461,692 tCO2e, a reduction of 38.2 per cent year-on-year. We were awarded an A rating for our Climate Change CDP submission for the ninth consecutive year and are the only
Donated over 10 million meals through our partnership with Neighbourly since launching in 2021, preventing over 4,500 tonnes of food from going to waste
Reduced absolute plastic packaging by 17.5 per cent from our baseline9. We are focused on reducing plastic packaging on high volume products and were the first retailer to vacuum-pack all beef mince, which will save over 450 tonnes of plastic a year
Financial Summary 2022/23 2021/22 2019/20 YoY Yo3Y
Outlook
Our Food First strategy has given us the financial flexibility to make the right decisions for customers, for colleagues, for communities and ultimately for our shareholders. This has delivered strong results and we're starting the new financial year with great momentum. We're determined to build on this stronger base and sustain this momentum, retaining the flexibility to make the right choices given a still uncertain outlook for consumer spending. Therefore, at this early stage of the year we expect underlying profit before tax will be between
Dividend
The Board has proposed a final dividend of
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 live webcast presentation and Q&A will be held at 09:15 (BST). The webcast can be accessed at the following link: https://sainsburys-2022-23-preliminary-results-announcement.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 issue its 2023/24 First Quarter Trading Statement at 07:00 (BST) on
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Strategy Review: Driven by our passion for food, together we serve and help every customer
We are two years into our three-year plan to transform Sainsbury's, putting food back at the heart of our business and we are fundamentally stronger. Prioritising food, building on our strong brand heritage and reputation for quality, innovation and service while offering customers more consistent value has enabled us to deliver strong results.
Bolder prioritisation has allowed us to make more focused investments in our brands - Argos, Habitat, Tu, Nectar and
Underpinning all of this is our ambitious cost savings programme, Save to Invest. While we have had to make some difficult decisions, the investments we have made through this programme are delivering strong results and putting us ahead of our competitors. Our work to build a simpler and more efficient business enables us to reinvest where it makes the biggest difference to customers.
Food First
We are making good progress to put food back at the heart of Sainsbury's by offering better value, more new products and improved service. Our grocery volume market share performance has improved considerably1 since we launched our Food First plan and we are growing our volumes ahead of other full-choice grocers12.
Value
As the cost of living crisis continues to put pressure on millions of households, we are relentlessly focused on delivering consistent value for customers. Driven by our bold cost savings programme, we have invested over
At the end of December we increased the number of products in Aldi Price Match by 20 per cent and our largest ever campaign matched the price on around 300 fresh products and household staples including chicken breasts, milk, eggs, nappies and cereal. Own brand ranges are performing strongly and our entry price range is the fastest growing product tier.
We recently launched Nectar Prices, offering discounts to all supermarket and online customers using the Nectar app or card and results are already exceeding our expectations. Your Nectar Prices - previously My Nectar Prices, which launched in 2021 - offers customers their own personalised discounts, generating more than 70 million unique offers a week for customers using SmartShop in supermarkets. The most active Your Nectar Prices users are saving almost
Innovation
We have exceeded our innovation target by 15 per cent and launched nearly 1,400 new products during the year. More customers are celebrating special occasions, treating themselves at home and we outperformed the market at key seasonal events5. We expanded our Taste the Difference range by 33 per cent year-on-year and Taste the Difference sales are up 16 per cent versus FY2019/20.
Our seasonal ranges are popular with customers and our second Autumn Editions range included 70 per cent more products year-on-year. Since launching Inspired to Cook last year, the range has been popular with customers as more people look for creative solutions to home cooking from scratch and our
In January we launched Flourish, a new range with 70 fresh and healthy convenient products that help people eat better whilst on the move. The range is already popular and bestselling lines so far include the Pesto Chicken Sandwich and Immune Boosting smoothie.
We are also changing the way we work with suppliers to build long term partnerships that drive better results. Last year we agreed a long-term contract with
Service
We have announced a record
Alongside competitive pay we have invested heavily in extra support for colleagues in response to increased financial pressure. Colleagues told us that free food at work was important and so we recently extended the provision of free food during shifts for a further six months. To help our colleagues have more control over their monthly budgets, we also introduced a pay advance scheme where colleagues can access their pay as they earn it and invested in more frequent deeper discounts at Argos and Sainsbury's to help colleagues save money on their shopping.
Rewarding our colleagues is driving higher colleague engagement scores and higher customer satisfaction scores. Supermarket satisfaction is consistently performing ahead of full choice competitors15, particularly in product quality and availability and colleague availability16. Colleague engagement scores have also improved over the last two years.
Customers are increasingly returning to stores post-pandemic and more people are prioritising convenience and speed as they return to the workplace. As a result, we have grown Convenience sales to
Groceries Online sales were down 13 per cent year-on-year but were 81 per cent higher than pre-pandemic levels. Groceries Online accounts for 14 per cent of grocery sales versus 8 per cent in FY2019/20. We introduced more Christmas delivery slots to serve customers and brought forward Easter grocery slots and availability scores are up17. Online productivity has improved with items picked per hour up 6 per cent year-on-year and up 9 per cent on pre-pandemic levels.
Brands that Deliver
Our portfolio of brands - Argos, Habitat, Tu, Nectar and
Nectar is the
Argos has consistently outperformed the General Merchandise market over the last year7 as we have built on its reputation for value and delivered better convenience and availability. Customers value the certainty and speed of Fast Track delivery and Click & Collect and towards the end of the year more sales went through Argos stores inside supermarkets than standalone Argos stores for the first time. Argos's market-leading Click & Collect and delivery offering made an especially big difference during the postal strikes over Christmas and last summer's hot weather, when many customers used Fast Track delivery - often under four hours - for seasonal products including paddling pools and barbecues. We have extended the breadth of range at Argos, including more premium brands, and continue to invest in Argos's digital capabilities, with 73 per cent of sales now originating online.
The transformation of the Argos store and distribution network continues at pace, reducing cost and improving availability and service for customers. We now have 17 Local Fulfilment Centres, a network that is transforming the speed at which we can fulfil customer orders and is improving product availability and driving improved customer satisfaction18. We now have the best national same and next day delivery proposition of any
Tu is the sixth largest
Habitat is performing well against a challenging General Merchandise backdrop and we have gained value market share in a number of homeware categories including bedding and decorations8. We are working with third-party designers including
Our Financial Services business is benefitting from a tighter focus on providing services for Sainsbury's and Argos customers. Profits have recovered to pre-pandemic levels as lending activity and travel money demand have increased but the loan book remains smaller than pre-pandemic levels.
Save to Invest
Our cost saving programme, Save to Invest, provides the fuel that drives our ability to invest in the areas that make the biggest difference for customers. We have made bold and deliberate decisions over the last two years to ensure we can invest in keeping prices low for customers and colleague pay. We are on track to deliver around
We are making structural savings by rationalising our property estate and focusing on ensuring our stores are in the right locations to deliver for customers and serve communities. In the last year, we have closed eight convenience stores and three supermarkets. We have also opened 13 new convenience stores including one Neighbourhood Hub. We made the difficult decision to close our Argos operations in
In February, we announced plans to close two of our warehouses and invest
We plan to transform and simplify our logistics operations by working more effectively with the expert partners who already run significant parts of our network. We have announced plans to move to three dedicated partnerships across transport, food, general merchandise and clothing by the end of 2024, instead of multiple different contracts across the network. This will make the best use of our partners' expertise to provide better service and availability for customers, drive innovation and facilitate the sharing of industry best practice.
We are also focused on making our supply chains more efficient and increasing productivity in order to improve performance whilst creating simpler and more streamlined end-to-end processes. We have rolled out new supply chain capabilities across our food business including changing the way we forecast demand, how we purchase and order goods and the way our suppliers plan production. This is driving better availability and reducing waste.
We are becoming a simpler, nimbler and more efficient business so that we can reinvest in what matters most to customers. We have made changes to some of our office space and the way some of our Store Support Centre teams work in order to simplify processes. More than ever, our office-based colleagues are able to work remotely or from home and we have seen a significant reduction in the number that regularly use Sainsbury's offices across our locations in the
Plan for Better
We know that the environmental and social challenges facing the world have never been greater and that these are issues our customers and colleagues care about too. As a
Better for the planet
We recognise the importance of investing in environmental sustainability to help reduce our impact on the planet and ensure the long-term success of our business. This is why we are continuing to take bold and decisive actions to meet our accelerated target to become Net Zero in our own operations by 2035.
As part of the WWF's Retailer Commitment for Nature, we (along with the other signatories) have increased our ambition to reduce Scope 3 emissions by 50 per cent by 2030 and net zero Scope 3 emissions by 2050. We have submitted this updated target to the SBTi (Science Based Targets initiative) for approval by the end of 2023.
We have reduced our Scope 1 and 2 absolute greenhouse gas (GHG) emissions within our operations to 461,692 tCO2e, a reduction of 38.2 per cent year-on-year and 51.4 per cent from our 2018/19 baseline. We were proud that our environmental transparency was again recognised by CDP, an environmental impact disclosure system. We were awarded an A rating for climate change for the ninth consecutive year, the only
This year we finalised the rollout of LED lighting to 100 per cent of our entire estate, helping to reduce our lighting energy consumption by an average of 70 per cent. From
We have committed to reducing our own-brand plastic packaging by 50 per cent by 2025, so far achieving absolute reduction in plastic packaging of 17.5 per cent from our baseline9. We have introduced initiatives such as quadruple strength fruit squash, double length toilet rolls and removing single-use plastic lids and were the first
We are supporting our communities to help reduce food waste at home to decrease carbon emissions and help households save money. Since the launch of our partnership with Neighbourly in 2021, we have donated over 10 million meals to local partners who redistribute food to those who need it most. This is equivalent to a
Better for Everyone
We are passionate about making a positive impact on the lives of millions of people by making the right choices for our customers, colleagues and communities.
Being an inclusive business with diverse representation at all levels is important to us. We came third in the latest FTSE Women Leaders Review, with 50.7 per cent senior women across our combined executive committee and direct reports. Only 23
As part of our mission to be a truly inclusive retailer, last summer we launched 'Thrive with Sainsbury's', a free programme that invested
In response to the rising cost of living and as part of our commitment to Helping everyone eat better, we launched our Nourish the Nation community programme to provide food and urgent support for those most in need. Working with our longstanding charity partners
Better for You
Our ambition is to provide every customer with accessible information, affordable products and incentives to help them make better choices for themselves and for the planet. In 2022, we announced our revised health target based on changes to our nutrient criteria following updated government reformulation targets and expert advice, to increase our Healthy and Better for You sales tonnage to 85 per cent of total sales by FY2025/26. At least 70 per cent of the products in Aldi Price Match are also Healthy or Better for You choices.
We launched The Great Fruit & Veg Challenge for the third year to reward shoppers with extra Nectar points for purchasing fruit and vegetables between July and September. Over 585,000 customers signed up to take part and bought 88 million portions of fruit and vegetables during the challenge.
1
2
3 Value Reality. 1,610bps improvement vs
4 Average annual saving across our top 30,000 most active Your Nectar Price users
5 Nielsen EPOS data - JS volume growth YoY% difference to Total Market growth YoY% for key events week growth versus last year events week
6 Combined operating profit of
7 GfK tracked market share 12 months to
8 Global Data, Retail % of Value, Homewares, full-year to
9 Baseline reflects 2018 CY for Food + 2020 CY for
10 Refer to alternative performance measures for definitions and reconciliation to statutory measures
11 Special dividend is included against FY2019/20 to aid comparability
12
13 Nielsen panel data. Top 100 SKUs by retailer. Average Selling Price YoY growth. 52 weeks to
14 Nielsen panel data. Net volume switching GBPm to
15 Competitor benchmarking survey.
16 Competitor benchmarking survey. Q4 22/23 supermarket CSAT scores 12 weeks to
17 Competitor benchmarking survey. Q4 22/23 Groceries Online CSAT scores 12 weeks to
18 Customer Satisfaction - Argos, % score FY2022/23 average vs FY2021/22 average
19 Kantar Retail Share Total Clothing, Footwear & Accessories - % sales volume. 24 weeks ending
See full release at: https://about.sainsburys.co.uk/news/latest-news/2023/27-04-23-preliminary-results
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