Third Quarter Trading Statement for the 16 weeks to 8 January 2022
Strong Christmas grocery volumes and market share growth; upgrade to profit guidance
Food First: focus on value, innovation and service delivering volume market share gains
- Market share gains: Our bold investments in value, new products and service have driven volume market share gains, growing ahead of the market through Q3 and the key Christmas period over one and two years1
- Value: We have invested in the value of our food ranges ahead of the market2 through the year, Q3 and at Christmas to improve our price position and are more competitive than ever. Following the success of our Sainsbury's Quality, Aldi Price Match Christmas dinner campaign, we are now matching Aldi prices on 150 of our highest volume fresh food products and putting over 2,000 lines into our Price Lock promise so customers can be certain they are getting great value on the items they buy most often
- Innovation: We launched over 600 new products in Q3, of which 300 were new Christmas products, as part of our plan to triple our levels of product innovation. New Taste the Difference products in party food, desserts, wines and spirits were really popular and we had record sales of champagne and sparkling wines. Taste the Difference was our fastest growing product tier with sales up 13 per cent over two years in the key Christmas weeks3
- Service: We launched a record recruitment drive this Christmas, investing to employ 22,000 temporary colleagues to make sure our stores were safe and well stocked and to meet online demand. Online sales were nearly double the level of two years ago3. Working with our suppliers and investing in our operations, we improved availability and our customer satisfaction scores. To reward colleagues, we are investing £100m to increase the base pay to £10 per hour from March
Brands that Deliver: strategy supporting General Merchandise and Clothing profitability
- General Merchandise and Clothing sales were down year on year reflecting an exceptional performance last year, limited availability in key product areas and our focus on profitable sales, including reduced promotional activity
- Full price Clothing sales were up 38 per cent versus two years ago as we reduced markdowns and promotions
- General Merchandise and Clothing profits are in line with expectations, reflecting stronger gross margins and operating cost transformation
Upgrade to profit guidance, reflecting strong grocery sales, cost savings delivery and improved Bank outlook
- We now expect to report underlying profit before tax of at least £720m in the financial year to March 20224
Q3 and Christmas Trading Highlights5 |
YoY Sales growth |
Yo2Y Sales growth |
||||
|
Q3 16 wks to 8 Jan 22 |
Christmas 6 wks to 8 Jan 22 |
Christmas exc. Boxing day 6 wks to 8 Jan 226 |
Q3 16 wks to 8 Jan 22 |
Christmas 6 wks to 8 Jan 22 |
Christmas exc. Boxing day 6 wks to 8 Jan 226 |
Grocery |
(1.1)% |
0.1% |
0.8% |
6.6% |
6.8% |
7.7% |
General Merchandise |
(16.0)% |
(10.6%) |
(10.4%) |
(11.0)% |
(8.6)% |
(8.3)% |
Clothing |
(2.7)% |
2.0% |
2.9% |
(1.7)% |
11.6% |
12.9% |
Total Retail (exc. fuel) |
(5.3)% |
(2.9)% |
(2.4)% |
1.4% |
2.4% |
3.1% |
Groceries Online |
(16.5)% |
(15.1)% |
(15.1)% |
92.0% |
95.2% |
95.2% |
Simon Roberts, Chief Executive of J Sainsbury plc, said
“I am really pleased with how we delivered for customers this Christmas. More people ate at home and our significant investment in value, innovation and service led to market share growth. At the same time, we are pleased to increase profit guidance for the full year.
“The backdrop was challenging and our teams worked hard throughout the year to make sure we had all of the products everyone wanted. Our suppliers did a great job in challenging conditions throughout the quarter and I thank them for all their support for our business.
“We were bold in our plan for product, value, innovation and service and delivered volume growth ahead of the market. We delivered our best value food this Christmas, launched our lowest ever priced Christmas dinner heading into the key Christmas shopping week and we had our biggest ever New Year. Customers also treated themselves and new Taste the Difference products in party food, desserts, wines and spirits were really popular and we had record sales of champagne and sparkling wines. Offering great value will be more important than ever this year and we have just launched our bold new Sainsbury's Quality Aldi Price Match campaign, which targets 150 fresh products that customers buy most often.
“We also delivered a strong digital performance, responding to a surge in demand for online deliveries over Christmas and last-minute online gift shopping at Argos.
“Our teams have done a brilliant job working very hard in exceptional circumstances. We delivered great service in our supermarkets and strong availability this Christmas when it mattered most. I'm hugely grateful to all our team for everything they did to deliver for our customers and we closed all our stores on Boxing Day this year to give our colleagues a well-deserved break. We are increasing base pay for Sainsbury's and Argos store colleagues to £10 an hour from March to recognise their brilliant efforts every day in serving our customers.”
Outlook
Our expectations for full year profits are ahead of previous guidance, with investment in the customer proposition and higher operating cost inflation offset by structural cost savings and stronger than expected grocery volumes, driven in part by increased in-home grocery consumption. Argos continued to benefit from stronger margins supported by transformational operating cost reductions. Financial Services profit expectations are running ahead of consensus7 with bad debts lower than expected and lending volumes starting to recover. We now expect to report underlying profit before tax of at least £720m in the financial year to March 2022. Free cash flow remains strong and we expect to meet our net debt reduction target ahead of schedule.
Total sales performance5 |
2020/21 |
2021/22 YoY |
2021/22 Yo2Y |
|||||||
|
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q38 |
Q1 |
Q2 |
Q38 |
Grocery |
10.5% |
5.1% |
7.4% |
7.1% |
0.8% |
0.8% |
(1.1)% |
11.3% |
6.0% |
6.6% |
General Merchandise |
7.2% |
7.6% |
6.0% |
17.6% |
(1.4)% |
(11.4)% |
(16.0)% |
5.6% |
(4.7)% |
(11.0)% |
GM (Argos) |
10.7% |
10.9% |
8.4% |
18.1% |
(3.7)% |
(12.0)% |
(16.1)% |
6.7% |
(2.4)% |
(9.1)% |
GM (Sainsbury's Supermarkets) |
(9.3)% |
(6.9)% |
(5.4)% |
14.8% |
11.2% |
(8.0)% |
(15.7)% |
0.9% |
(14.4)% |
(20.0)% |
Clothing |
(26.7)% |
(7.5)% |
0.4% |
4.2% |
57.6% |
9.2% |
(2.7)% |
15.5% |
1.0% |
(1.7)% |
Total Retail (exc. fuel) |
8.5% |
5.2% |
6.8% |
9.2% |
1.6% |
(1.7)% |
(5.3)% |
10.3% |
3.4% |
1.4% |
Fuel |
(56.1)% |
(29.3)% |
(29.0)% |
(38.5)% |
95.1% |
36.1% |
47.5% |
(14.4)% |
(3.8)% |
3.6% |
Total Retail (inc. fuel) |
(2.1)% |
(0.4)% |
1.7% |
1.6% |
8.5% |
2.7% |
(0.1)% |
6.2% |
2.2% |
1.7% |
Like-for-like sales performance5 |
2020/21 |
2021/22 |
|||||
|
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q38 |
Like-for-like sales (exc. fuel) |
8.2% |
5.1% |
8.6% |
11.3% |
1.6% |
(1.4)% |
(4.5)% |
Like-for-like sales (inc. fuel) |
(2.3)% |
(0.5)% |
3.2% |
3.2% |
8.4% |
3.0% |
0.6% |