J Sainsbury plc - Christmas and Q3 Grocery volume performance ahead of the market for the third consecutive year1, driven by investment in value, innovation, service and availability. General Merchandise growth stronger than expected, reflecting market share gains2 as customers trusted Sainsbury's and Argos for value and the speed and certainty of Argos Fast Track delivery and Click & Collect.

Q3 retail (exc. fuel) sales up 5.2%. Like-for-like sales up 5.9%, reflecting inflation and relatively resilient volume trends

Q3 Grocery sales up 5.6% and General Merchandise sales up 4.6%. Grocery sales 12.5% ahead of pre-pandemic levels

Christmas sales up 7.1%, with Grocery sales up 7.1%, General Merchandise sales up 7.4% and Clothing sales up 5.1%

Profits expected to be towards upper end of guidance range GBP630m to GBP690m3

Retail free cash flow expected to be around GBP600m, ahead of previous guidance of at least GBP500m4

See details at: https://about.sainsburys.co.uk/news/latest-news/2023/11-01-23-q3-results

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

'We delivered the best possible Christmas for customers as millions of households managed their budgets differently, hosting larger gatherings again and treating themselves at home. Customers shopped early, buying Christmas treats and fizz more than once and looked for deals, taking advantage of Black Friday and other seasonal offers. Argos offered great value and quality and, as train and postal strikes disrupted the country, customers appreciated its reliability and convenience.

'We prioritised keeping our prices low and giving our customers great value at Christmas. We went bold on the traditional fresh turkey roast dinner with all the trimmings and dessert, which was the best value in the market at under GBP4 per head. Sales were also boosted by the World Cup as people celebrated more at home. Our determined focus on delivering the best value alongside new and exciting festive food plus outstanding customer service and availability meant we delivered record sales, and market outperformance at both Sainsbury's and Argos.

'We understand money will be exceptionally tight this year particularly as many people wait for Christmas bills to land. We are working together with our suppliers to battle cost inflation and we're keeping prices low again this year with our biggest value campaign yet in January, price matching Aldi on around 300 of our most popular products.

'Finally, a huge thank you to all my colleagues who really do make the difference for our customers. We announced a market leading pay rise for our front line colleagues last week to GBP11 per hour (GBP11.95 in London) and an additional six months of free food in stores and depots. I am hugely grateful to all our team and suppliers for their hard work and support in delivering these results.'

Outlook

Investment in value, innovation, service and product availability delivered stronger volume trends across Grocery and General Merchandise, particularly at Christmas. We will additionally benefit from finance costs around GBP15 million lower than previously guided, broadly offset by the cost of a significant colleague pay increase ahead of the year end annual pay review. As a result, while we remain cautious on the consumer backdrop, we now expect underlying profit before tax for the year to March 2023 to be towards the upper end of the guidance range of GBP630 million to GBP690 million. We additionally expect to generate retail free cashflow of around GBP600 million, ahead of our previous guidance of at least GBP500 million.

Strategic Highlights

Food First: Our strategic investments in value, innovation, service and availability have driven volume market share gains over Q3 and the key Christmas period6, with customers choosing Sainsbury's to help them create a special celebration.

Value:

We continue to inflate behind the market7 and have improved our value position against all key competitors8. In November we accelerated our value plan and announced a further GBP50 million investment in low prices by March 2023, bringing the total investment to GBP550 million

We delivered our most competitive Christmas ever, leading the market with our great value Christmas roast dinner which was priced at less than GBP4 per person. We performed strongly over Christmas on key fresh food products, with market share outperformance in Meat, Fish and Poultry, and Fruit and Vegetables9

Our Own Brand ranges performed strongly, as customers looked for great value as well as festive treats, with overall sales growth of 10 per cent10, and our entry price product range was the fastest growing sub-brand

We have extended Aldi Price Match this January, now bigger than ever with around 300 products, including more than 180 fresh products and important household staples such as nappies, cereals and canned soups

Innovation

We launched 300 new products for Christmas, including 145 Taste the Difference products and celebrated many Taste Test wins. Standout new products included our Taste the Difference Mulled Cider Glazed Gammon Joint, Salted Caramel and Belgian Chocolate Wreath and Cherry and Almond Panettone

Taste the Difference outperformed our full choice supermarket competitors' premium ranges11, with sales up 10 per cent year on year and 27 per cent over three year12, as customers treated themselves while celebrating Christmas at home

Taste the Difference Mince Pie sales increased 22 per cent, Taste the Difference Panettone sales increased 49 per cent, and we had record sales for Champagne and prosecco as customers shopped our market leading offers on sparkling wines13

In January we launched Flourish, a new brand with a focus on helping customers to eat better, with tasty and healthy options such as salads, ready meals, fresh soups and smoothies

Service:

We invested in service and availability to deliver a great Christmas offer, recruiting over 25,000 new colleagues to Sainsbury's and Argos this Christmas and working more closely with our suppliers than ever to deliver significant improvements in availability. This supported leading supermarket customer satisfaction scores14

We released Groceries Online Christmas home delivery slots five weeks earlier than last year and delivered on Christmas Eve for the first time. Customer satisfaction in Groceries Online for Christmas week improved against last year15

We brought forward our annual pay increase and last week announced a further GBP185 million investment in colleague pay and benefits, increasing the base rate for our retail colleagues to GBP11 per hour nationally and GBP11.95 in London from February

Brands that Deliver: Argos continues to gain market share2 in a tough general merchandise market, reflecting a reputation for value, great product availability and the certainty for customers of Argos for Fast Track home delivery and Click & Collect fulfilment.

Argos performed exceptionally well over the key Christmas week as customers turned to our stores in supermarkets for great value and reliable, last minute Christmas gifting

Sales of technology products were particularly strong, driven by improved availability and promotional activity in the run up to the Football World Cup. Household categories performed well as customers bought energy saving items such as air fryers and heated laundry airers and Habitat branded products outperformed in home and furniture

We started our Black Friday awareness campaign earlier this year and delivered sales ahead of last year, with over 120 million visits to the Argos website over the campaign period16 and 15,000 orders processed per hour on Black Friday itself

Cold weather towards the end of the quarter drove an uplift in sales for Tu Clothing, with knitwear and Christmas pyjamas particularly popular with customers

We helped customers to boost their Nectar point balances with enhanced personalised product offers on the Nectar app during the lead up to Christmas and almost 900,000 customers redeemed their points in Sainsbury's during Christmas week

We expanded the Nectar360 Retail Media network, announcing an innovative Connected TV partnership with Channel 4

Financial Services has benefited from a continued increase in demand, offset by increased provisioning due to the subdued economic outlook

Plan for Better:

We launched our Nourish the Nation community programme in November through which we are donating GBP4 million to Comic Relief, FareShare and other key redistribution partners to support local community food projects

We continue to work in partnership with Neighbourly and over the Christmas period17 our stores connected with local partners to redistribute over 930,000 meals to those in need

This festive season, we removed single-use plastic lids from our Christmas own-brand brandy butter and brandy cream range, saving 679,000 pieces of plastic. We also replaced plastic with foil trays for turkey crowns, saving over 210,000 pieces of plastic

Like-for-like sales performance: See details at:

https://about.sainsburys.co.uk/news/latest-news/2023/11-01-23-q3-results

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 9:30 (GMT). This will be available to view on our website at the following link: https://sainsbury-s-q3-trading-statement-2022-23.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 announce its Preliminary Results for the year ending 4 March 2023 on 27 April 2023.

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