J Sainsbury : Preliminary Results for the 52 weeks ended 5 March 2022

28 April 2022

Delivering for customers, colleagues, communities and shareholders

Preliminary results for the 52 weeks to 5 March 2022

Delivering for customers, colleagues, communities and shareholders

Simon Roberts, Chief Executive of J Sainsbury plc, said: "In a year of unprecedented change we have been relentlessly focused on putting customers and colleagues first while delivering the first year of our plan to put food back at the heart of Sainsbury's. We said we would invest in value, innovation and service and that's exactly what we're doing. We have outperformed key competitors on both a one and two-year basis¹ while also delivering strong underlying profit growth, improved returns and consistent retail free cash flow. This gives us a strong foundation to keep building momentum in the year ahead.

"We know just how much everyone is feeling the impact of inflation, which is why we are so determined to keep delivering the best value for customers. We have been able to drive more investment into lowering food prices funded by our comprehensive cost savings plans. As a result, we continue to inflate behind competitors on the products customers buy most often. Last week we announced the next bold phase of investment, lowering prices across 150 of our highest volume fresh products.

"As our colleagues are feeling the impact of inflation too we prioritised investment of over £100 million into colleague pay. All Sainsbury's and Argos retail colleagues now earn the Living Wage wherever they work in the UK, we were the first major supermarket to make this happen. I want to thank every one of my colleagues for the outstanding job you've done every day. I am immensely proud of our entire team.

"I would also like to thank our suppliers for all their support throughout the last year. Partnership and collaboration through these times of significant industry challenge and change have never been more important.

"The dreadful situation in Ukraine continues to have a profound impact. We're doing everything we can to help with the humanitarian effort, and are working to manage the supply chain impacts.

"We have a clear long term focus on keeping prices low and we remain committed to helping everyone eat better, whatever the external environment may bring."

Financial Highlights

• Retail sales inc. fuel up 3.4%, ex. fuel sales down 2.6%. Ex. VAT Group sales up 2.9%
  - Grocery sales up 7.6% versus FY 2019/20, broadly flat versus FY 2020/21, reflecting sustained COVID-19-driven demand and strong volume market share performance over one and two years
  - General Merchandise sales down 4.6% versus FY 2019/20, reflecting availability challenges in key product areas and our focus on profitable sales. Down 11.9% versus FY 2020/21
• Underlying profit before tax² of £730 million, up 25% versus FY 2019/20 and up 104% versus FY 2020/21, which included substantial COVID-19 costs
  - Reflects elevated grocery sales and lower finance charges, with significant investment in core grocery funded by cost savings, fuel and a more profitable general merchandise and clothing business
• Statutory profit before tax of £854 million versus £278 million³ in FY 2019/20 and a loss of £164 million³ in FY 2020/21
  - Reflects lower restructuring and impairment costs and exceptional income from settling legal disputes
• Financial Services £38 million profit versus FY 2020/21 £21 million loss and £48 million profit in FY 2019/20
  - We expect further profit improvement in FY 2022/23
  - Following the year end, the Bank has paid its first ever dividend to the Group, of £50 million
• Strong Retail Free Cash Flow of £503 million². Average Free Cash Flow in three years to March 2022 £633 million
• Non-lease Net Debt down £1,381 million in three years to March 2022, ahead of target £950 million+ over four years
• Proposed final dividend of 9.9 pence, full-year dividend of 13.1 pence, up 24%
• Capital allocation framework updated. Initial commitment to increase dividend payout ratio to around 60%
• Outlook: The year ahead will be impacted by significant external pressures and uncertainties. At this early stage of the year we expect FY 2022/23 underlying profit before tax² of between £630 million and £690 million
  

Strategic highlights

• Food First:We are focused on giving customers better value and improved innovation and customer service.
  - Significant investment in grocery prices, funded by our cost saving programme, has driven a strong grocery volume market share performance over one and two years¹
  - We are inflating behind the market on the highest volume products⁴. By investing ahead of competitors, with a clear focus on fresh food, our prices are improving
  - We have more than tripled product innovation in the year and have grown Taste the Difference sales by 15% versus FY 2019/20. Customer satisfaction scores performed ahead of competitors in our supermarkets and online customer satisfaction improved relative to peers⁵
  - 39 per cent of our sales came through digital channels, versus 23 per cent in FY 2019/20. Groceries Online accounted for 17 per cent of overall Grocery sales

• Brands that Deliver:Nectar, Argos, Habitat, Tu and Sainsbury's Bank are delivering for our customers and our shareholders and supporting investments in our wider customer offer.
  - The Argos transformation programme is on track and Argos is a more profitable business. 80 per cent of Argos sales now originate online
  - Sainsbury's Bank is making good progress with its strategic plan and has paid the Group a dividend for the first time, of £50 million
  - Nectar has 9.3 million digital users, with over one million customers regularly benefitting from personalised promotions through My Nectar Prices and Nectar360 revenues are ahead of plan
  - Tu Clothing is now a £1 billion brand, with sales growth of 3.1% versus FY 2019/20, underpinned by good online sales, up 49%

• Save to Invest:We are making good progress with our cost saving programme.
  - We reduced our cost: sales ratio by 83 basis points versus FY 2019/20 and continue to target reducing our cost: sales ratio by 200 basis points despite significantly higher inflationary pressures
  - Transforming our eat-in, takeaway and delivery food and drink and bakery offer as well as hot food counter closures will save £125-150 million over three years and integrating the Sainsbury's, Argos and Habitat supply chain and logistics operations will save at least £250 million when complete
  - The cost savings programme is fuelling investment in our grocery value and our broader customer offer

• Plan for Better:This year we have accelerated our sustainability goals.
  - As a Principal Partner of COP26, we brought forward our commitment to be Net Zero in our own operations by 2035, five years ahead of our original target. We have also committed to reduce our Scope 3 emissions by 30% by 2030.
  - We are proud to support our communities and raised over £6 million for Comic Relief as part of this year's Red Nose Day and have already donated a further £2 million to Comic Relief to support the humanitarian crisis in Ukraine
  - Through our partnership with Neighbourly, we donated over 2.5 million meals between August and March - the equivalent of £4.8 million - to charities and community groups⁶, additionally supporting our target to reduce food waste by 50% by 2030

Financial Summary	2021/22	2020/21	2019/20	YoY	Yo2Y
Statutory performance
Group revenue (excl. VAT, inc. fuel)	£29,895m	£29,048m	£28,993m	2.9%	3.1%
Profit/(loss) before tax3	£854m	£(164)m	£278m	N/A	207%
Profit/(loss) after tax3	£677m	£(201)m	£170m	N/A	298%
Basic earnings/(loss) per share3	29.8p	(9.4)p	6.7p	N/A	367%
Business performance
Group sales (inc. VAT)	£33,355m	£32,285m	£32,394m	3.3%	3.0%
Retail sales (inc. VAT, excl. fuel)	£28,095m	£28,837m	£26,868m	(2.6)%	4.6%
Digital sales	£10.8bn	£12.1bn	£6.0bn	(11)%	80%
Underlying profit before tax 2, 3	£730m	£357m	£586m	104%	25%
Underlying basic earnings per share 2, 3	25.4p	11.7p	19.8p	117%	28%
Interim dividend per share	3.2p	3.2p	3.3p	0%	(3.0)%
Proposed Final dividend per share7	9.9p	7.4p	7.3p	34%	36%
Proposed Full-year dividend per share7	13.1p	10.6p	10.6p	24%	24%
Net debt2	£6,759m	£6,469m	£6,947m	Up £290m	Down £188m
Non-lease net debt	£141m	£640m	£1,179m	Down £499m	Down £1,038m
Return on capital employed2	8.4%	5.6%	7.4%	Up 280bps	Up 100bps

Like-for-like sales performance

2020/21	2021/22 YoY
Q3	Q4	Q1	Q2	Q3	Q4	FY
Like-for-like sales (exc. fuel)	8.6%	11.3%	1.6%	(1.4)%	(4.5)%	(5.6)%	(2.3)%
Like-for-like sales (inc. fuel)	3.2%	3.2%	8.4%	3.0%	0.6%	2.7%	3.6%

Total sales performance

2020/21	2021/22 YoY	2021/22 Yo2Y
Q3	Q4	Q1	Q2	Q3	Q4	FY	Q1	Q2	Q3	Q4	FY
Grocery	7.4%	7.1%	0.8%	0.8%	(1.1)%	(1.6)%	(0.2)%	11.3%	6.0%	6.6%	4.7%	7.6%
General Merchandise	6.0%	17.6%	(1.4)%	(11.4)%	(16.0)%	(21.1)%	(11.9)%	5.6%	(4.7)%	(11.0)%	(5.8)%	(4.6)%
GM (Argos)	8.4%	18.1%	(3.7)%	(12.0)%	(16.1)%	(20.4)%	(12.5)%	6.7%	(2.4)%	(9.1)%	(4.7)%	(3.0)%
GM (Sainsbury's Supermarkets)	(5.4)%	14.8%	11.2%	(8.0)%	(15.7)%	(24.1)%	(8.6)%	0.9%	(14.4)%	(20.0)%	(10.9)%	(12.0)%
Clothing	0.4%	4.2%	57.6%	9.2%	(2.7)%	(9.3)%	12.7%	15.5%	1.0%	(1.7)%	(6.8)%	3.1%
Total Retail (excl. fuel)	6.8%	9.2%	1.6%	(1.7)%	(5.3)%	(6.2)%	(2.6)%	10.3%	3.4%	1.4%	2.2%	4.6%
Fuel	(29.0)%	(38.5)%	95.1%	36.1%	47.5%	80.1%	60.0%	(14.4)%	(3.8)%	3.6%	11.7%	(2.6)%
Total Retail (inc. fuel)	1.7%	1.6%	8.5%	2.7%	(0.1)%	2.2%	3.4%	6.2%	2.2%	1.7%	3.7%	3.5%

Outlook

We start this year in a good position financially, with continued operating momentum and sharp execution supporting our strong competitive position.

The year ahead will be impacted by significant external pressures and uncertainties, including higher operating cost inflation and cost of living pressures impacting customers' disposable incomes.

In that context we are determined to continue our consistent improvement in grocery value, innovation and customer service, funded by our comprehensive cost savings programme and we expect to continue our strong grocery volume market share performance.

At this early stage of the financial year we expect underlying profit before tax will be between £630 million and £690 million. This is below the £730 million reported in FY 2021/22, a year which benefited by an estimated £100 million from elevated COVID-19 driven grocery volumes, but significantly ahead of the £586 million reported in FY 2019/20.

We continue to expect to generate retail free cash flow of at least £500 million in FY 2022/23. Together with our strong balance sheet, this is reflected in our commitment to return a higher proportion of underlying profits to shareholders, initially through an increased payout ratio.

Capital Allocation

Cash flow and Leverage

We have had another year of strong free cash flow generation, with retail free cash flow of £503 million despite some reversal of last year's exceptional working capital inflows.

Over the last three years we have generated average retail free cash flow of £633 million, ahead of our target of at least £500 million.

Strong cash generation, disciplined spending and a £240 million benefit from convertible bond redemptions have enabled us to reduce non-lease net debt by over £1.8 billion, from £2 billion five years ago to £141 million in FY 2021/22. We have hit our four-year £950 million+ net debt reduction target a year ahead of schedule and our net debt to EBITDA leverage ratio now stands at 3.1x.

We have achieved this deleverage while simultaneously paying a broadly stable dividend per share to shareholders, a total of £1.1 billion over five years and propose a full-year dividend per share this year of 13.1p, a 24 per cent increase year on year and the highest dividend per share we have paid since 2015. This will return around £300 million of cash to shareholders.

Capital Allocation

• Looking forward, we will continue to invest in the business to support and accelerate our strategy, including the Save to Invest programme and the ongoing transition to a more digital future
• We expect capital expenditure to remain in the range of £700 million to £750 million and expect to continue to generate retail free cash flow of at least £500 million per year
• We will use some of this retail free cash flow to deleverage further, targeting a solid investment grade balance sheet consistent with target leverage of net debt to EBITDA of 3.0x - 2.4x
• We are focused on delivering strong dividends and will return a higher proportion of underlying earnings to shareholders, in the first instance through the ordinary dividend, where we will increase the dividend payout ratio from around 53 per cent of underlying earnings to around 60 per cent
• We expect leverage to move below 3x over time, helped by a reduced impact of lease liabilities relating to property currently in the Highbury and Dragon property investment pools. Once leverage is comfortably within our target range, we expect to be able to return more cash to shareholders through higher dividends and/or share buybacks

Capital allocation priorities

• Invest in the business to support and accelerate our strategy
• A solid investment grade balance sheet, targeting leverage of 3.0x-2.4x net debt/EBITDA
• Deliver strong ordinary dividends for shareholders, with a payout ratio of around 60 per cent of underlying net earnings
• Selectively invest in projects where commercially interesting/NPV positive opportunities exist, such as lease buy-ins
• Return surplus cash to shareholders through higher dividends and/or share buybacks
  

Dividend

The Board has proposed a final dividend of 9.9 pence per share. This brings the full-year dividend to 13.1 pence per share, a 24% increase, reflecting the strong growth in earnings per share and covered 1.9 times by underlying earnings.

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 will be available to view on our website at 7.30am (BST). The webcast can be accessed at the following link: https://webcasts.sainsburys.co.uk/sainsbury167

Following the release of the webcast, a Q&A conference call will be held at 9.30am (BST). This will be available to listen to on our website at the following link: https://webcasts.sainsburys.co.uk/sainsbury168

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 2022/23 First Quarter Trading Statement at 07:00 (BST) on 5 July 2022.

ENDS

EnquiriesInvestor Relations
James Collins
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Media
Rebecca Reilly
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Strategy Review: Driven by our passion for food, together we serve and help every customer

We are one year into our three-year plan to transform Sainsbury's and put food back at the heart of our business. We are simplifying our operations at pace and accelerating our cost saving programmes in order to invest in consistently delivering value to customers, improving food quality and increasing innovation. Our brands that deliver - Argos, Habitat, Tu, Nectar and Sainsbury's Bank - support our core food business, delivering for customers and shareholders in their own right. We will continue to pursue partnerships and to outsource where appropriate, where a partnership model can help us improve our customer offer and make our business more efficient and simpler.

Food First

We are putting food back at the heart of Sainsbury's. This means we are focused on lowering prices, launching new products and improving service. We have gained grocery volume market share from our key supermarket competitors on both a one and two-year basis¹ and grocery sales are up 7.6 per cent on a two-year basis.

Value
We are making good progress to improve the value of our food. We know that the current cost of living situation is challenging for everyone and we are relentlessly focused on delivering consistent long-term value by offering customers great quality, tasty food at low prices. As a result of being bold in our cost savings plan, we are able to drive investment back into lower food prices and we are consistently inflating behind competitors on the products customers buy most often - including milk, eggs, potatoes, bread, vegetables, fish and meat. As a result, our relative price position has remained strong throughout the year - improving 310 basis points against Aldi, year on year⁹, leading to more customers shopping with us. By focusing on fresh and high-volume lines we are offering customers better value, improving price perception and delivering strong volume market performance.

Through the year our Price Lock promotion fixed the price of up to 2,000 items for a minimum of at least eight weeks. Customers can be assured that prices will not rise on those products, helping them to plan and budget. Through Price Lock we are holding down the prices of more products than our competitors.

We have also increased the number of entry price point products on offer for customers, including Greengrocer fruit & vegetables, J. James meat and poultry and Stamford Street ready meals offer customers a wide choice of products.

Innovation
We have delivered our plan to triple the number of new lines we sell, launching over 1,900 products across all our food brands. We developed our 'Inspired to Cook' range in response to the shift towards eating at home and cooking from scratch, launching a range of over 200 products across Grocery and Fresh Foods which make home cooking simple and tasty for customers. In March we launched 350 new branded World Food products, our biggest investment into this category to date and in the first six weeks sales are up significantly.

Our premium Taste the Difference range continues to perform well, particularly at key seasonal and celebratory moments when people want to trade up, such as Christmas and Easter. We have grown sales by 15 per cent versus two years ago.

In March we began our food hall transformation programme. We have rolled out our successful Beauty Hall format in more stores, improved the layout of our fresh ranges to make it easier for customers to shop, increased our popular World Foods ranges and improved our in-store bakeries. We have also simplified some of our ranges and provided a greater breadth of products across others, delivering more choice for customers on the products they really want.

Service
We are committed to rewarding our colleagues and all Sainsbury's and Argos retail colleagues now receive a base rate of pay of £10 per hour, above both the National Living Wage and the Living Wage. In March we increased inner London pay from £10.10 to £11.05 in line with the London Living Wage. We have announced that from 1 May 2022 the outer London rate will also be moving to £11.05, from £10.50. This means that all Sainsbury's and Argos retail colleagues earn the Living Wage wherever they are in the UK. We were the first supermarket among the big four to make this happen.

Alongside competitive pay we also offer a comprehensive benefits package, including year-round colleague discount of 10 per cent, increased to 15 per cent for five days around every pay day, pension contributions and an improved family leave policy.

We improved customer service scores in supermarkets⁵ and are adapting our Sainsbury's store estate to offer more new and innovative products. This year we opened four new supermarkets and as part of our drive to offer a broader range of distinctive food to customers in-store, on the move and at home, we announced bold new plans to transform our eat-in, takeaway and home delivery offer. Through a partnership with Boparan Restaurant Group we have developed "The Restaurant Hub" format, a food hall style offer with different brands which we will roll out across 30 stores in the next year, with more to come in the future. We will also open 30 Starbucks cafés in Sainsbury's stores in the next year, bringing the total number to 60. We took the decision to close 200 underperforming cafés in the Spring.

Our Convenience business grew 9 per cent driven by more people returning to the workplace, with sales now broadly back at pre-pandemic levels. We opened 19 convenience stores and closed 23. We are making progress with our plan to open more Neighbourhood Hub stores which give customers a larger, more convenient local store with a wider produce range, more choice and better services.

39 per cent of our overall business now comes through digital channels, versus 23 per cent in FY 2019/20. We are seeing a normalisation of pre-COVID-19 shopping patterns as customers are returning to shopping in stores and demand for Groceries Online, non-food home delivery and Click & Collect has stabilised, although it remains more than double pre-pandemic levels.

Groceries Online accounted for 17 per cent of grocery sales with an average of 690,000 orders per week. In FY 2021/22 we grew our Groceries Online market share to become the second largest online grocery retailer, up from fourth before the pandemic⁸. This scale gives us advantage. We have improved profitability by enhancing picking rates and van utilisation. We are exploring new ways to make our delivery services better for customers and more efficient and initiatives include one-hour saver slots and changes to our delivery pass model. Customer satisfaction in Online is improving relative to competitors5.

We relaunched our same day groceries service in 284 stores and we continue to grow our On Demand grocery offer. In the fourth quarter we averaged 130,000 weekly orders from over 580 stores in as little as 30 minutes through our Chop Chop service and partnerships with Deliveroo and Uber Eats.

Brands that Deliver

Our brands that deliver - Nectar, Argos, Habitat, Tu and Sainsbury's Bank - are delivering for our customers and our shareholders and supporting investments in our wider customer offer.

Argos sales were down 12.5 per cent year on year against last year's high sales during the pandemic. Sales were down three per cent over two years and were impacted by availability issues caused by supply chain disruptions and the strategic decisions we made to reduce promotions and exit less profitable categories. Reflecting this focus, household and home and furniture sales grew while sales of toys, consumer electronics and technology categories declined. We have grown our furniture market share over the past two years, driven by Habitat, Sainsbury's and Argos's main home and furniture brand. Following a relaunch in September, Habitat products are now available in 600 Sainsbury's stores and online via the Argos and Habitat websites. We are growing our digital presence to ensure that we are well placed to serve customers who increasingly want to buy online. 80 per cent of Argos sales are now online, up from 63 per cent two years ago.

Nectar supports our ambitions in food by giving customers personalised rewards for their loyalty. 9.3 million digital Nectar users can benefit from personalised offers with us and with our Nectar partners. This year we launched My Nectar Prices - an innovative data-led tool which gives customers discounted prices that are personal to them, delivering even more value for loyal customers. Over one million customers are benefitting from lower prices and we will develop the proposition further. Nectar360, our marketing services business, is making good progress and we are on track to hit our 2026 plan on profit.

Tu clothing delivered sales growth of 12.7 per cent over one year and 3.1 per cent over two years and delivers over £1 billion in sales. We are selling more clothing at full price - with full priced sales participation now at 89 per cent compared with 65 per cent two years ago - and running fewer promotions, which improves profitability and supports increased investment in our core food business.

We continue to make good progress reshaping, strengthening and simplifying our Financial Services business, with profits of £38 million versus a loss of £21 million in FY 2020/21. This compares with £48 million in FY 2019/20. FY 2020/21 was impacted by COVID-19 where we saw significantly reduced demand across consumer credit, combined with increased bad debt provisions and less activity in our fee-based products, particularly Travel Money. Reflecting the Bank's progress, following the year end, it has paid dividend to the Group for the first time, of £50 million.

We have continued to improve our digital capability with the launch of the Argos Monthly Payment Plan, which allows customers to spread the cost of a purchase across fixed monthly repayments for a period of their choice. We have transformed the Sainsbury's Bank loan application journey for single and joint applicants with a fully digital onboarding experience that can transfer funds to accounts in just minutes. We have also improved the application journey for savings customers.

Save to Invest

We are making good progress with our cost saving programme, making bold decisions and prioritising what really matters to customers. By reducing our retail operating costs, we are able to invest more into our core food business, delivering better value, increasing our innovation and improving customer service. Our retail operating costs to sales ratio has reduced by 83 basis points versus FY 2019/20 and we continue to target reducing the ratio by at least 200 basis points by the end of FY 2023/24, despite cost inflation being significantly higher than was anticipated when this target was set.

We are working at pace to integrate the Sainsbury's, Argos and Habitat supply chain and logistics networks, which will save at least £250 million over the programme, improve overall efficiency and deliver a better service to our customers. Our property rationalisation programme is on track and this year we closed four underperforming supermarkets and 23 convenience stores. We are also working to improve the efficiency of Groceries Online, moving stores to a new, more efficient routing system and improving pick rates, which will save the business around £50 million overall. In addition, we are investing to improve the checkout experience for customers and colleagues which will drive around £50 million of cost efficiencies. This includes trialling improvements to the layout of self-service areas, making it easier for colleagues to help customers, reducing queuing times and creating additional space for shoppers with trolleys, increasing participation.

We are making good progress in Argos's end-to-end transformation programme, which will save £105 million over three years. We have opened five Local Fulfilment Centres (LFCs) and as a result, our customers are benefitting from improved availability, faster delivery and more collection options; we plan to open nine more LFCs this year. In line with improving availability and convenience for customers whilst reducing costs, this year we opened 64 Argos stores inside Sainsbury's supermarkets plus 62 in-store collection points. We have closed 73 standalone Argos stores this year. As of 5 March 2022, Argos has 728 stores, of which 400 are inside Sainsbury's supermarkets.

We partner with third parties and outsource where necessary to deliver for our customers, whilst supporting our own cost saving programme and our focus on food. The changes we are making to our cafes, hot food counters and bakeries will create £125-150 million of savings over three years and we will continue to explore ways to work with partners to drive value and improve service for our customers.

We are proud of our strong relationships with suppliers and are continuing to work closely with them to drive value and simplify processes, enabling us to lower our cost to serve and buy better, as well as minimising the impact of rising inflation as much as possible for customers.

Plan for Better

This year we have accelerated our sustainability goals, as set out in our Plan for Better. We have made good progress against our programme of change and have announced a more ambitious target towards becoming a Net Zero business.

Better for the planet
We are strengthening our commitment to tackle the climate crisis by accelerating our target to become Net Zero in our operations by 2035, five years earlier than our initial ambition and in alignment with the UN's own goal to limit global warming. Outside of our operations, we also have introduced an ambitious Scope 3 target, which requires the reduction of absolute GHG (greenhouse gas) emissions by 30 per cent by 2030, to align to well below the 2°C scenario of the Paris Agreement. The target includes reducing emissions from purchased goods, upstream transport and distribution, services sold and our customers' use and consumption of the products we sell. By delivering against our Scope 3 targets by 2030, we will help customers make more sustainable product choices.

Overall, we have reduced our absolute GHG emissions within our operations to 762,119 tCO2e, a reduction of 7 per cent year-on-year and 20 per cent from our 2018/19 baseline, keeping us on course for our new 2035 target. We have hit some key milestones in our plan, including the roll out of LED lighting across 100 per cent of our supermarket estate and transitioning to 100 per cent renewable electricity. We have also committed to the long-term purchasing of renewable energy from new wind farms and solar projects, significantly reducing our reliance on fossil fuels. For the eighth consecutive year we were awarded an A rating for climate change by CDP, an environmental impact disclosure system, and are the only UK retailer to have achieved this.

We were proud to be the Principal Supermarket Partner of COP26 in Glasgow in November. Alongside announcing our commitment to becoming Net Zero five years ahead of schedule, we joined other retailers to sign WWF's Retailers' Commitment For Nature, pledging to come together to halve the environmental impact of the UK food sector by 2030.

We have introduced measures to reduce the amount of plastic packaging we use. We no longer sell plastic straws, equating to the removal of 18.5 million plastic straws from circulation and reducing plastic by 6.6 tonnes. We have also introduced flexible plastic recycling collection points at all of our supermarkets to make it easier for our customers to recycle.

Better for Everyone
In line with our commitment to reduce food waste by 50 per cent by 2035, we have increased our food distribution to people by 119 per cent year on year. In August, we partnered with Neighbourly and from August to March we donated over 2.5 million meals, which is equivalent to a £4.8 million saving to charities and community groups⁶.

Supply chain transparency is one our highest priorities and having previously published our Tier 1 clothing sites, this year we also published our Tier 1 food sites. This provides even greater transparency across our categories and we have committed to publishing additional lists of our General Merchandise and Goods Not for Resale sites this year.

Reflecting our drive for inclusivity, this year our ethnically diverse colleague network 'I AM ME' was recognised in the Top 10 Network Groups at the UK Ethnicity Awards and we joined the Black British Network to help improve representation even further across the business. We also committed £1 million in donations to Black charities and community groups supporting education, social mobility, Black businesses and food insecurity, areas which our colleagues and customers identified as especially important to them.

This year we raised over £6 million for Comic Relief, in addition to the £2 million we donated as a business to support the humanitarian crisis in Ukraine, followed by an additional £600,000 raised by our customers. We are proud to support the communities we serve and this year have raised a total of £38.4 million for good causes.

Better for You
Our Better for You pillar prioritises delivering healthy and sustainable diets for all. As the cost of living rises, we are more committed than ever to supporting healthy diets by keeping prices low on every day, staple items, including fresh and produce.

As part of our target to measure healthy and sustainable diets, we announced our goal to achieve at least 83.1 per cent of 'healthy' and 'better for you' sales by 2025. We are currently flat year on year at 80 per cent. We also disclosed our protein sales, with 72 per cent of protein sales being plant based and meat-free products, of which 12 per cent is entirely plant based.

To encourage customers to follow a healthy diet, we continued to support the government's Healthy Start vouchers. During the six-month programme, we topped up these vouchers to a higher value than any other retailer and helped over 17,000 customers take home an additional 1.2 million portions of fruit and vegetables.