TIDMSBRY
RNS Number : 8460K
Sainsbury(J) PLC
07 January 2021
7 January 2021
J Sainsbury plc
Third Quarter Trading Statement for the 15 weeks to 2 January
2021
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Strong Q3 and Christmas performance
-- Christmas like-for-like sales up 9.3 per cent(1)
-- Q3 like-for-like sales up 8.6 per cent (excl. fuel), with
total retail sales up 6.8 per cent (excl. fuel)
-- Grocery sales grew 7.4 per cent, with Groceries Online up 128 per cent
-- General Merchandise sales grew by 6.0 per cent, with Argos sales up 8.4 per cent
-- Clothing sales grew by 0.4 per cent
-- Total digital sales grew by 81 per cent, 44 per cent of total sales
-- We now expect, after forgoing business rates relief of GBP410
million, to report underlying profit before tax (UPBT) of at least
GBP330 million in the financial year to March 2021 (financial year
to March 2020: GBP586 million)
Simon Roberts, Chief Executive of J Sainsbury plc, said: "As we
enter our third phase of tighter restrictions and national
lockdowns, my number one priority remains keeping our colleagues
and customers safe. The last few months have been really tough for
many people and we are all dealing with a lot of change and
uncertainty again. Given these challenging circumstances, we really
focused on doing the best possible job for our customers this
Christmas. I would like to say a huge thank you to every one of my
colleagues, including the 68,000 colleagues we have recruited into
Sainsbury's and Argos since March, for the outstanding service you
gave our customers.
"We made a strong start to delivering our Food First plan and we
are also clear on the opportunities to further improve our offer as
we look ahead for 2021. At Christmas we focused on offering our
customers great prices, great quality and great service and I feel
really proud that Sainsbury's customer satisfaction scores were the
highest ever in the key Christmas week. We have started the new
year with a strong value offer, with Price Lock currently on over
2,500 everyday products.
"Many customers had to change their Christmas plans at the last
minute and we sold smaller turkeys and more lamb and beef than
normal. While people had smaller gatherings, they still treated
themselves, with Taste the Difference sales up 11 per cent. Premium
champagne sales were up 52 per cent, Taste the Difference party
food was popular throughout December and people did more home
baking than usual with mincemeat sales up 24 per cent. Customers
still wanted New Year's Eve at home to feel special and we sold a
record number of steaks.
"More customers bought their food online than ever before and we
delivered 1.1 million orders in the ten days to Christmas, double
the number of last year. Argos sales were up over eight per cent
with Fast Track home delivery and Click & Collect beating
expectations for Black Friday and Christmas.
"We are delighted that our 'Help Brighten a Million Christmases'
campaign raised GBP6 million in just two weeks for over 800 local
charitable partners as well as Comic Relief and FareShare. We are
also creating another GBP1 million local community fund for all our
stores to donate to charities and other good causes in their local
area and we are continuing to support the government's free school
meal vouchers scheme.
"We remain focused on delivering the plan we outlined in
November and look forward to providing a further update on early
progress at our Preliminary Results in April ."
Outlook
Grocery, General Merchandise and Clothing sales were stronger
than our expectations throughout the quarter and particularly since
the start of England's second national lockdown and subsequent
increased restrictions throughout the UK. General Merchandise and
Clothing gross margins additionally benefited from better than
anticipated full price sales, driven by customers shopping earlier
for Christmas and successful changes to our Black Friday trading
strategy.
The impact of the pandemic on sales, colleagues and costs adds
additional uncertainty to our financial outlook for the remainder
of the year. However, after forgoing business rates relief of
GBP410 million(2) we now expect to report underlying profit before
tax (UPBT) of at least GBP330 million in the financial year to
March 2021 (financial year to March 2020: GBP586 million).
Like-for-like sales 2019/20 2020/21
growth
-------------------------------------- ----------------------------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3
------- ------- ------- ------- -------- -------- --------
Like-for-like sales
(exc. fuel) (1.6)% (0.2)% (0.7)% 1.3% 8.2% 5.1% 8.6%
------- ------- ------- ------- -------- -------- --------
Like-for-like sales
(inc. fuel) (1.0)% (0.4)% (1.1)% 1.3% (2.3)% (0.5)% 3.2%
------- ------- ------- ------- -------- -------- --------
2019/20 2020/21
Total sales growth Q1 Q2 Q3 Q4 Q1 Q2 Q3
-------------------------------------- ------- ------- ------- ------- -------- -------- --------
Grocery (0.5)% 0.6% 0.4% 2.0% 10.5% 5.1% 7.4%
------- ------- ------- ------- -------- -------- --------
Total General Merchandise (3.1)% (2.0)% (3.9)% (1.3)% 7.2% 7.6% 6.0%
------- ------- ------- ------- -------- -------- --------
GM (Argos) 0.4% 10.7% 10.9% 8.4%
------- ------- ------- ------- -------- -------- --------
GM (Sainsbury's Supermarkets) (8.1)% (9.3)% (6.9)% (5.4)%
------- ------- ------- ------- -------- -------- --------
Clothing (4.5)% 3.3% 4.4% 2.5% (26.7)% (7.5)% 0.4%
------- ------- ------- ------- -------- -------- --------
Total Retail (excl.
fuel) (1.2)% 0.1% (0.7)% 1.3% 8.5% 5.2% 6.8%
------- ------- ------- ------- -------- -------- --------
Fuel 4.9% (56.1)% (29.3)% (29.0)%
------- ------- ------- ------- -------- -------- --------
Total Retail (inc.
fuel) (0.6)% 0.1% (0.9)% 1.9% (2.1)% (0.4)% 1.7%
------- ------- ------- ------- -------- -------- --------
Strategic and operational highlights
We published a Strategy Update with our Interim Results in
November, focused on putting food back at the heart of Sainsbury's
and are making encouraging progress towards this:
Food First
-- We delivered strong food sales through the quarter. Basket
sizes increased as customers bought more of their shopping from
Sainsbury's and we grew our Food market share
-- We continue to lower prices on the products that matter most
to customers, with a particular focus on fresh foods. Last week we
launched our biggest ever Price Lock, covering over 2,500
products
-- Colleagues delivered excellent customer service throughout
the key Christmas weeks and customers felt safe shopping with us.
Scores in availability and friendliness of colleagues improved by
10 percentage points and six percentage points respectively
year-on-year
-- We are focused on offering exciting new products and bringing
them to our customers faster. Christmas innovations this year
included Taste the Difference Pink Prawn Roses, Pigs in Blankets
Christmas Tree and flavoured spirits such as Taste the Difference
Blackfriars Winterberry & Clementine Gin
-- Taste the Difference performed well over the quarter, with
sales up more than 11 per cent and we launched over 60 new Taste
the Difference Christmas products. Our meat-free range Plant
Pioneers also outperformed the market and customers bought more of
our vegan centrepieces such as our No Turkey Parcels and our No
Beef Wellington
-- Groceries Online sales grew by 128 per cent year-on-year,
accounting for 18 per cent of grocery sales. We have more than
doubled the number of slots we can offer for home delivery and
Click & Collect; Click & Collect accounted for 24 per cent
of online sales in the key Christmas week. We have further
increased the productivity of our online operation: as we build
order capacity from broadly the same fixed asset base, orders per
van continue to increase and pick rates have returned to pre-COVID
levels
-- SmartShop self-scan accounted for 28 per cent of sales in
stores with handsets, leading to strong customer satisfaction
scores in ease and speed of checkout
-- We continue to invest to have the right stores in the right
locations for customers. We opened six new stores in the quarter,
including two new Neighbourhood Hub stores in Bishop's Waltham and
Midhurst
Brands that Deliver
-- Argos sales grew by over eight per cent in the quarter, with
nearly 90 per cent of sales starting online and Fast Track delivery
grew by 62 per cent
-- Argos growth was driven by a strong performance across a wide
variety of categories, with particularly good growth in Christmas
gifting, gaming consoles and TVs. This was despite a Black Friday
performance which reflected a continued reduction in promotional
activity in favour of lower everyday prices
-- Tu Clothing has grown market share in both value and volume, with strong online growth
-- 6.4 million people are now using digital Nectar and Nectar
participation at Argos remains ahead of expectations
-- Financial Services recovered from first half losses to book a
profit in the third quarter. We continue to expect to deliver an
underlying profit in the second half of the financial year to March
2021, driven by savings pricing, benefits from cost actions and
some cautious rebuilding of lending volumes. The balance sheet
remains strong with capital buffers exceeding levels reported at
our Interim Results in November. Levels of arrears are lower than
expected
(1) Total retail (exc. Fuel) like-for-like sales, 9 weeks from 1
November 2020 to 2 Jan 2021.
(2) The timing and mechanic by which we will forgo business
rates relief is still to be determined but we expect to recognise
the forgoing of GBP410 million business rates relief relating to
the financial year to March 2021 to UPBT in this financial year (to
March 2021).
Tim Fallowfield, Company Secretary and Corporate Services
Director, was responsible for the disclosure of this
announcement.
Investor Relations Enquiries Media Enquiries
James Collins +44 (0) 20 7695 0080 Rebecca Reilly +44 (0) 20
7695 7295
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 09:15. 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 Preliminary Results for the
financial year to March 2021 on 28 April 2021.
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END
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