J Sainsbury H2 24/25 Earnings Report

J Sainsbury EPS Results

• Actual EPS: GBX 23.10
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

J Sainsbury Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

J Sainsbury Announcement Details

• Quarter: H2 24/25
• Date: 4/17/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, April 17, 2025
• Conference Call Time: 4:15AM ET

J Sainsbury (LON:SBRY) is one of the UK's leading food, general merchandise and clothing retailers. Offering delicious, great quality food at competitive prices has been at the heart of what we do since we opened our first store in 1869. Today, inspiring and delighting our customers with tasty food remains our priority. Our purpose is that driven by our passion for food, together we serve and help every customer. Our focus on great value food and convenient shopping, whether in-store or online is supported by our brands – Argos, Habitat, Tu, Nectar and Sainsbury’s Bank. Sainsbury’s has over 600 supermarkets and over 800 convenience stores. Argos is a leading digital retailer and is the third most visited retail website in the UK. Argos is conveniently available for customers to collect from hundreds of Sainsbury’s stores. Digital and technology enables us to adapt as customers shop differently and our profitable, fast-growing online channels offer customers quick and convenient delivery and collection capability. Our 189,000 colleagues are integral to our success, now and in the future.

J Sainsbury H2 24/25 Earnings Call Transcript

Presentation

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Good morning everyone and welcome to our twenty fourtwenty five preliminary results presentation. Thank you for joining us today. As usual I will start with a brief introduction before handing over to Blaned who will cover the financials. I will then share the detail on our progress we have made during this first year of our next level strategy and the plans we have for the year ahead. Now as a reminder, this is the Next Level Sainsbury's plan we set out in February of last year.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

You will remember our refreshed purpose. We make good food, joyful, accessible and affordable for everyone, every day. And underpinning our purpose, here are our four strategic outcomes which we set out to define this next phase of our growth. Our purpose and outcomes are the driving force for the choices we make across the business and guide how we show up and deliver for all our stakeholders. First choice for food.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

We are bringing more of our food range to more customers in more locations, attracting more bigger basket primary shoppers and delivering further grocery volume share gains. Loyalty everyone loves. We're making loyalty more personalized for our customers and investing to accelerate our market leading retail media capabilities. More Argus, More Often. Where we're taking focused action to extend range, enhance digital capabilities, and improve relevance to grow frequency and spend in Argos whilst delivering further operating model efficiencies.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And underpinning all of these outcomes is our plan to save and invest to win, delivering another £1,000,000,000 of structural cost savings and investing in our capabilities across technology, automation and infrastructure. Now over the past four years, we've transformed our business. We've invested £1,000,000,000 in lowering our prices and now have the winning combination of value, quality and service in the market. A combination that our customers love. And we're obsessed with the consistency of how we show up for customers week in week out.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

We're food first and people first. Our people are at the heart of delivering everything that we do. That's why we led the sector on pay in January for the third year in a row, and why we've increased CODIC pay by 58% since 2018. We continue to invest in the quality and resilience of our supply chain through building long term partnerships with our suppliers, ensuring leading availability for years to come. And we've built resilience and created sustainable competitive advantage across our customer offer, our operations and our technology platform.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

We are stronger, more agile and we have the capabilities to win in this market. And these are not capabilities that you can build or deliver sustainably overnight. We've been making balanced choices since the start of our four year turnaround. This discipline has got us to where we are now, and we will continue to guide our outcomes to deliver for all of our stakeholders going forward. Now you've heard me talk before about the key factors that really influence where customers choose to do their grocery shopping: value, quality and service.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Through focusing our £1,000,000,000 of price investment where it matters most for customers, they now know they can trust us to deliver consistently great value. And because of this value perception continues to improve at a faster rate than our competitors. Our reputation for outstanding quality and innovation continues to strengthen And we've reached record levels of customer satisfaction and availability over the last year continuing to lead our key competitors on overall customer satisfaction too. More customers are making Sainsbury's their first choice for food. Over the last four years the number of primary customers, those doing the majority of their grocery shopping at Sainsbury's has increased by 18%.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And so in the last year we have delivered our biggest market share gains in more than a decade. We promised this would feed through to profit leverage, and it has, with Sainsbury's profit growth of over 15%. This is supported by our industry leading cost savings programme, where we are well on track having delivered £349,000,000 of savings in this first year. And we have a clear line of sight to £1,000,000,000 of savings over the three years to March 27 and this will be a vital point of difference in the year ahead. We are also committed to improving returns and so while we are spending more capital on growth and efficiency, the higher retail profit has fed through to an improved ROCE.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And we're delivering higher cash returns to shareholders while keeping leverage comfortably in the middle of our target range. Now these are the eight commitments that we laid out with our next level strategy. A year in and we've made really strong progress against an ambitious plan. Right across the business, our teams have done the most brilliant job as we've stepped up. We have delivered improving customer satisfaction, food volume growth ahead of the market, and as a result profit leverage from sales growth.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And we have good line of sight on our financial commitments as we look ahead and we are confident of delivering over the three year programme. So accelerating into the year ahead is exactly what we are doing. Starting the year with strong trading momentum across all our brands. Our belief in the strength of the Sainsbury's offer has driven our decision to make our largest investment expanding store space in more than a decade. With 40 store openings planned for this year, we are moving at pace and with confidence as we focus on delivering this next phase of our growth.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And as we bring the best of our food offer to more customers, we are going further with our plans for product innovation, scaling our personalized loyalty program and taking strategic action in Argos to make sure that we have the best range and proposition for our customers. Now all of this is underpinned by the investments we are making in technology to drive efficiency, deliver better customer experience and enhance our platform for growth. So as we look to the year ahead, this puts us in a really strong place. In the guidance we've given this morning, you can see that we will continue to make balanced choices and that gives us the capacity to navigate the environment around us. And to be clear, we are committed above all else to sustaining the strong competitive position we have built and we expect to continue to outperform the market.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Finally, introducing our results this morning, I want to say we are proud of what we've delivered for our customers this year and of the progress we've made in what has been such a strong first year of our next level plan. Now this level of success doesn't happen without the most passionate, committed and dedicated teams working right across Sainsbury's every day. Our colleagues, suppliers and partners have really stepped up this year. They've done an exceptional job and for that I'm hugely grateful. With that I'll now hand over to Blanid to take us through the numbers.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Good morning and thank you Simon. I will now cover the financial highlights for the fifty two weeks to the March 1. Starting first with a reminder of our financial framework. This lays out the factors that underpin our commitments to deliver profit leverage from sales growth, strong cash flows, higher return on capital employed and enhanced shareholder returns. One year into this next level strategy, we are really pleased with our progress.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

We've delivered food volume growth ahead of the market, profit leverage and continued strong cash generation. We have returned more than £500,000,000 of cash to shareholders in the year through the payment of our dividend and a £200,000,000 share buyback. Let's move on to our sales performance. Sales in Sainsbury's grew by 4.2% in the year, whilst Argus sales declined by 2.7%. This led to retail sales growth of 3.1%, excluding fuel, and 1.4% growth, including fuel.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Looking at the shape of that through the year. Grocery sales growth was slightly stronger in the first half, driven by higher volume growth against weaker comps, but we continued to grow volumes in the second half despite tougher comparatives. Grocery inflation averaged between 12% in the year but ticked up slightly in the fourth quarter. Sainsbury's general merchandise and clothing sales improved in the second half, driven in particular by strong sales growth in clothing as we took actions to drive availability and improve women's wear ranges. Argo sales were behind our expectations in the first half due to a significant reduction in online traffic and a weak start to the summer.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Performance strengthened in the second half as we took action to improve traffic and volume. Sales returned to growth in the fourth quarter. Turning now to retail profit. Retail underlying operating profit grew by 7.2% year on year. This was driven by double digit growth profit, reflecting strong grocery volumes, the delivery of operating leverage, continued growth in the Nektar profit contribution and good progress on cost savings.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

This was partially offset by lower year on year operating profits in Argus. Profits declined in both H1 and H2, with actions taken in H1 improving the outcome in the second half. Looking ahead to the financial year twenty twenty fivetwenty twenty six, we have started the year with good momentum across all of our brands. We expect to continue to grow grocery volumes ahead of the market. We expect to deliver retail underlying operating profit of around

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

GBP 1,000,000,000,

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

weighted more towards the second half than this year. This reflects the benefits of new supermarket openings and space reallocation activity being weighted more towards the second half with a higher level of disruption in the first half. Our guidance gives us the capacity to continue to make balanced choices across our business and sustain our current competitive position. Moving on to financial services. We announced in January a phased withdrawal from core banking, that is loans, credit cards and deposits, and a move to a model where financial services that are more complementary to the retail offer will be provided by third parties.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

We have announced several updates over the last year, which I will detail on the next slide. For now, this slide covers our underlying financial services performance. Underlying operating profit grew by 3.4% to GBP 30,000,000 on a total basis, inclusive of discontinued operations. Growth was driven by a reduction in overheads more than offsetting lower income driven by higher funding costs and lower lending as a result of the decision to exit core banking. Guiding on the year ahead, we expect to deliver underlying financial services operation profit of around £10,000,000 from continuing operations, including commission income from insurance products and travel money.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

This is over and above the retail underlying operating profit we've guided to. This compares to a continuing operations loss of £7,000,000 this year, reflecting a relatively high level of cost allocated that will normalize next year. As a reminder, on the recent changes of our Financial Services division, we announced the sale of our loan and credit card portfolios to NatWest in June, which we expect to complete next month. We then announced the sale of our ATM businesses last September. In October, we announced sale of our Argus Financial Services cards portfolio to New Day alongside a new forward flow contract to provide financial services products to Argus customers.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

This deal completed in February. Once complete, we continue to expect total annual profit from financial services of at least £40,000,000 to the group by the financial year to March 2028. This comprises income from the New Day partnership together with commission income from insurance, travel money, care and ATMs. We announced this morning that we expect to return Sainsbury's Bank disposal proceeds of £250,000,000 to shareholders in the second half of this financial year, subject to regulatory approval via special dividend and associated share consolidation. Any proceeds in excess of this will be used to enhance our twenty fivetwenty six share buyback program beyond a core level of £200,000,000 Moving on to underlying profit before tax.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Total underlying profit before tax grew by 8.6%. This was driven by higher retail operating profit and slightly higher financial services profit, partially offset by increased underlying finance costs, mainly attributable to interest paid on the GBP $575,000,000 term loan been fully drawn down for the majority of the year. Underlying basic earnings per share were up 4.5% to 23.1p, with the year on year increase behind UPBT growth given a higher underlying tax rate in the year. The next slide lays out items excluded from underlying results. We encouraged GBP $377,000,000 of non underlying costs in the year, with the large majority relating to the phased withdrawal from our Financial Services division.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Pounds two seventy four million of costs sit in discontinued operations, primarily relating to losses on disposals and provisions for onerous contracts. We also recognized structural integration costs of GBP 128,000,000 in relation to the multiyear restructuring program announced in November 2020 and the next level strategy program. Nonunderlying costs incurred are primarily noncash. We incurred retail cash costs of GBP 71,000,000 in the year, a little lower than guided due to phasing, and expect to incur cash costs of around GBP 100,000,000 in twenty twenty five-twenty twenty six, which includes some rollover from twenty twenty four-twenty twenty five. Turning to our cash flow metrics.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Retail free cash flow of GBP $531,000,000 was down year on year, mainly due to lower working capital inflows and higher corporation tax payments. Reduced working capital was driven by increased payables due to timing, partially offset by actions taken to reduce ARGUS stock levels. Net debt, excluding leases, increased by £64,000,000 year on year, and net debt, including leases, increased by $2.00 £4,000,000 driven by three large lease regears at distribution centers as well as lease additions from our new head office location and from acquisition of stores from Homebase and Co op in the year. This table shows the key elements of the cash flow and movements in net debt this year and last. The main difference in retail free cash flow this year is the lower working capital inflow.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

The movement in net debt, excluding lease liabilities, was an increase of £64,000,000 after returning $5.00 £8,000,000 to shareholders through dividends and share buybacks. Looking ahead, we are committed to continuing to deliver retail free cash flow of at least £500,000,000 in twenty twenty five-twenty twenty six, in line with our next level strategy commitment. We expect the composition of free cash flow to be similar to this year as we continue to drive improvements in working capital and expect capital expenditure to be broadly in line with this year. Cash contributions into our pension scheme will be around £20,000,000 lower year on year. We have included a slide on capital expenditure here.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Looking ahead to twenty fivetwenty six, you can see our spend on efficiency stepping up, underpinning our confidence in the delivery of our cost saving plan and further building sustained competitive advantage against competitors who are more cash constrained. We are tightly controlling maintenance CapEx while ensuring standards across the estate are good. And growth CapEx is higher across twenty fourtwenty five and twenty fivetwenty six, reflecting our plans for new space growth. This includes the cost of converting the acquired home base and co op stores, where we expect to deliver return on capital employed in the low teens. Our guidance remains unchanged.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

We expect to incur capital expenditure of between GBP 800,000,000 and GBP $850,000,000 in twenty twenty fivetwenty twenty six. Here we lay out our balance sheet metrics. Net debt to EBITDA has steadily reduced over time and remained flat year on year at 2.6x after funding the step up in cash returns for shareholders. We remain broadly in the middle of our target range of 2.4x to 3x. The strength of our balance sheet was reflected in the public investment grade rating that we published in January and we issued £550,000,000 of unsecured bonds under a new EMTM programme, our first unsecured bond issuance in twenty one years.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

We are pleased to deliver an increase in return on capital employed of 70 basis points to 9%, driven by growth in retail operating profit. On to shareholder returns. As we announced at last year's Capital Markets Day, we are commencing policy. Our proposed full year dividend per share is 13.6p, an increase of 4% year on year. Given the strength of our balance sheet, we have returned nearly all of our free cash flow generated in the year to shareholders through a dividend and buyback.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

And we have announced that we will buy back at least £200,000,000 of shares in the year ahead as well as paying a £250,000,000 special dividend relating to the bank divestment. In summary, we are pleased with our performance in the year one of our next level strategy, delivering continued grocery volume growth, retail operating profit leverage and enhanced returns to shareholders. Looking forward, we expect to continue to grow grocery volumes ahead of the market, sustain our strong competitive position, deliver retail operating profit of around GBP 1,000,000,000 and generate free cash flow of at least GBP £500,000,000 Thank you for your time. I will now hand back to Simon.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Thank you, Blanid. Let's now turn to look at the strategic highlights, covering each of our next level outcomes in turn. And starting with our plan to be first choice for food. The momentum we have in grocery is clear. We are delivering for our customers on freshness, availability, quality, outstanding service and experience, and consistently great price.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

All the components necessary for being the first choice for our customers. Through constantly delivering what is a winning combination, customers are more and more confident choosing us for their big weekly shop. And this is showing through in our sustained volume growth, reaching a two year growth rate of 5% over the course of the year. Resetting our value position has been a key focus over the last four years. We've invested a billion pounds in price and we have found a formula that really works through our combination of Audi price match, nectar prices, your nectar prices and low everyday prices.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And as a result we're in a really strong position versus all of our competitors. You can see our progress on the left hand chart which shows the extent of our improvement versus November 2020 when we started this work. We know what it has taken to reset our pricing position. We know how to invest selectively and smartly where it matters most to customers and we are very confident in our ability to sustain this competitive pricing position. We are a partner of choice for suppliers and this is evident in the support we have received for Nectar prices, with deals now available on more than 9,000 products.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

This sits alongside more targeted personalised offers available through your Nectar prices. And we have extended our Audi price match again, now on more than 700 products and more to come in the weeks ahead. It's a value formula that we know works for our customers. Customers trust us to deliver on best prices consistently on the fresh food center of the plate products they buy most often. And the reality of maintaining a strong competitive price position is consistently being noticed by our customers.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

We can see it in the significant improvement in value perception we've achieved this year. And all of this is translating into consistent and sustained market outperformance. Investing in price alone isn't enough and alongside strengthening our value position, we have reinvigorated our passion for food to ensure we are delivering the best freshness, inspiration and quality for our customers. We launched more than 1,300 new products over the course of the year, of which more than 600 were in Taste the Difference. And Taste the Difference sales grew 15% in the year with a particularly strong performance in fresh products where sales were up 17%.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

As a result, we continue to deliver the strongest premium owned label performance in the market as customers look to us to deliver outstanding quality at affordable prices for all the big events through the year and for every occasion they wanted to trade up. And we have clear ambitions for Taste the Difference in the year ahead, as we celebrate its twenty fifth birthday in a year where the brand is set to reach £2,000,000,000 of sales. There are lots of great things to come here, including more than 50% of our product innovation for the year ahead being in Taste the Difference. So watch this space as we celebrate with the biggest and best year yet for Taste the Difference. Our product innovation is only possible through the support of our suppliers and through that culture of trust, collaboration and long term partnership we have established.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

We are committed to driving investment into the food system, contributing to economic growth and a thriving farming sector in The UK through working more closely with our suppliers and farmers to give them long term assurance. We work with over 18,000 British farmers and we are committed to partnerships which are good for Sainsbury's, good for UK Farmers, good for customers and better for the environment. Last month we announced a ten year partnership with Cranswick. Together we're planning to invest around to improve welfare standards and provide more stability for our pork farmers, giving them the confidence to invest in more sustainable practices, building resilience for the future while protecting value for customers. This builds on the work we've done with Chicken and Moy Park and the Sainsbury's egg producer group we established this year too.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Working in collaboration with our three main egg packers and around 100 farmers to ensure continuous improvements in animal welfare, give financial reassurance to our farmers and secure protection for our egg supply chain for years to come. Through our Plan for Better we're going further all the time to support our customers to make healthy and more sustainable choices. Be this through inspiring them with our Healthy Choice logo and gamified nectar challenges that nudge towards healthier choices. By building knowledge through our good to know campaign, by using our skills in food innovation, food agriculture and packaging innovation to provide better for the planet choices, and by ensuring good food for everyone through our community initiatives, including increasing the amount of surplus food redistributed through our partnerships with Nabourly and Olio. For us, everything starts and finishes with delivering for our customers and so customer satisfaction is the measure we look at before anything else.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Customers expect leading service at Sainsbury's and we've been consistently delivering ahead of our competitors. Through strengthening our supplier relationships and introducing our machine learning forecasting tool, we've been able to make a major step forward on our availability. And of course this has a huge influence on customer satisfaction with satisfaction for availability now at record levels. Our deep confidence in the strength of our grocery proposition has driven our decision to open more new stores to bring the best of Sainsbury's to more customers, our biggest investment in space in over a decade. We've been very targeted in our approach here, identifying supermarkets in long sought after locations where we haven't got a significant presence.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And the home base and co op sites we acquired during the year tick all the boxes. Combined with our organic store opening programme we expect to open 15 new supermarkets in the year ahead and a further 25 new convenience stores. And we trust our track record to deliver here. We've opened over a hundred stores in the last five years and they are delivering strong returns. So we expect our 14 new stores in the year ahead to deliver similar benefits.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Now we're excited about the opportunity we have to reach new customers in new locations, but alongside this we're also making more of our food range available in our existing stores through our More for More plan. This is about rebalancing space away from clothing and general merchandise to really showcase the best of our food offer, driving a better customer experience and higher trading intensity. We are seeing positive early results in the invested stores and as we add another 90,000 square feet of space FY twenty five-twenty six we expect the benefits to build. Although this will be weighted to the second half and beyond as we annualise some initial disruption. We're also making some key propositional changes to food services in our stores driving growth, availability and efficiency at a lower cost to serve whilst also creating further space for fresh food.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

As a result of all these elements of space growth we expect to grow total food space in Sainsbury's by around 3% in the year ahead. Over the last year we achieved volume growth in every channel across supermarkets, convenience and online. We have transformed our convenience estate over the last year reconfiguring space, optimising our ranges and introducing our RLD price match campaign to deliver great value to customers wherever they shop with us. Now these changes have helped deliver convenience sales growth of almost 4% and market share growth of 20 basis points, as well as a step on in customer satisfaction. However, our highest growth in customer satisfaction of all channels has been in online.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

The changes we've made to improve the digital customer journey and better showcase our product ranges has been the key driver of increased basket size and greater frequency of visits driving sales growth of 7%. And our on demand rapid delivery channel remains very strong too with sales growth of around 80% this year as we have successfully rolled out the offer to more than 1,200 locations. We are driving continued profit growth across online and on demand with more improvements planned for the year ahead as we make meaningful changes to our groceries online app. Now within our plan to be first choice for food, we're doing more to improve the performance of the products and services that sit alongside our food offer. In two, we have improved our availability and refreshed our focus on design and range in women's wear.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

This has resulted in better clothing performance with sales growth of 12.3% in quarter four and higher full price sales participation through the year delivering market share gains and higher profits. And we continue to see opportunities to further strengthen what we're able to achieve into as we focus on improving product design and availability. We now have SmartCharge EV charging sites established in over 75 supermarket locations with 25% of all electric vehicles entering these car parts now charging with us. And these are maturing rapidly with sites delivering month for month double digit revenue growth. And this is our focus in the short term, building revenue and strengthening our offer through Nektar.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Turning next to loyalty everyone loves. Now as a reminder, within our Nectar ecosystem we have two parts. On the left hand side, our customer facing Nectar loyalty scheme, which is all about rewarding customers with points and cash discounts. Now the unique thing about our Nectar scheme is that it's a coalition, a clear point of difference for us so customers can earn and redeem points across a wide range of brands. Customers love the benefits of our Nektar loyalty programme and in taking Nektar to the next level we are making it more and more meaningful for customers, moving beyond simple rewards to using sophisticated tech to really step on our personalisation and customer proposition.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

On the right hand side is our Nectar three sixty Retail Media business. We have a huge number of media opportunities for our suppliers to talk directly to around 25,000,000 customers a week who visit our stores and our websites. The media services we provide deliver strong returns and give brands great insights to drive their innovation. Our data analytics helps clients and media agencies to improve the effectiveness of their digital media investments. There's no doubt that the establishment of Nectar prices has been truly transformational for us, delivering improved value perception for both Nectar and Sainsbury's.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

We executed the rollout at pace and customers can now choose from more than 9,000 Nectar prices offers, saving an average of £13 on their big weekly shop. We've delivered a huge step on in Nectar participation as a result, and we're really learning about what customers want from a loyalty scheme. Value across the board but also an expectation for personalisation offers geared individually to them on the items they buy most often. And this is informing the way we go further to deliver personalised rewarding and integrated loyalty. We've established a strong foundation moving from a card based loyalty scheme to a digital one building our capabilities to be truly market leading in what we can deliver.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Our ability to target customers with tailored propositions that appeal to their propensity to engage, whether that's through instant benefits or gamified challenges, is becoming more and more advanced and it's delivering results with our targeted Count Up To Christmas campaign this year reaching its highest engagement levels yet. We are already leading the way in personalisation having first launched this capability in 2021. But we're going further to scale this offer and are really refining our skills using machine learning to work towards 500,000,000 personalised offers per week. And through investing to enhance the design of our app and website, we're now making it even easier for customers to access the offers available to them, driving a significant increase in digital engagement. We're also leveraging these skills across the coalition to deliver more engaging mechanics with our partners, really showcasing the best value across the board.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

The strength of our loyalty scheme is the fuel for our Nektar three sixty business, our fully integrated loyalty, insights and media services agency, where we now have over 900 clients and media agencies partnering with us. Our next level plan in Nectar three sixty is anchored on three key growth initiatives, all of which have made strong progress in year one. We're growing the Nectar coalition with exciting new partnerships announced with Marriott Bonvoy, Seven Trent Water and Smart Charge, and with further new partnerships in discussion for the year ahead. We're leading on data and insights with our Sainsbury's insights platform delivering 10% growth year on year, and the Argus equivalent of this platform scaling rapidly. And we're really delivering our digital retail media offering, investing in our platforms and services to drive strong returns for advertisers.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

This is all being delivered with continuing strong customer satisfaction scores across the board. And we see more scope for growth in the years ahead. Having seen the benefits of the first phase of building a connected digital screen network across our stores, we're accelerating our plans to invest in this at scale with an ambition to reach more than 2,500 screens delivering a cash payback of less than two years. And we're developing innovative proprietary technology which will connect our audiences, media and measurement services and should be a real launch pad for growth as we look ahead. We're already ahead of our plan to deliver £100,000,000 of incremental profit contribution from Nektar three sixty, having delivered almost 40% of this in year one of the plan.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Underpinning our confidence in the continued strength of Nectar three sixty and its contribution to our profit delivery. Our priorities for Argos are super clear and haven't changed. We're focused on increasing the frequency of customer visits and average spend. More Argos, more often. In a tough year, we've had some significant headwinds.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

We've made some progress with a sharpened trading plan and better momentum towards the end of the year. We've previously talked about some of the headwinds that impacted sales and profit over the course of the year, with a slow start to the summer, a subdued customer, and significant discounting over the peak period impacting sales and margins. But our biggest challenge entering the year was online traffic. This was a key focus and as you can see, we've turned the trend here back in healthy positive territory in the fourth quarter. This has continued into the start of the new financial year.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Volumes have recovered alongside this. This reflects strong work on our digital proposition in particular. We're making some headway on basket spend, showing up more strongly on key brands at the right time with stronger trade partnerships and driving more product attachment. We're also continuing to expand our ranges through supplier direct fulfilment. We'll be adding another 10,000 products in the year ahead.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And we're focusing our own brand ranges on a tighter but stronger number of core brands. And we're bringing sharper value to customers through focused value campaigns such as our Big Red events. We've now completed the bulk of our standalone Argos store closures and the impact on sales of closures will be significantly lower year on year. Our focus is now on refining and resetting the store operating model and the store network, rightsizing some standalone stores and investing in others to improve brand standards and convenience. After a period of significant portfolio change, we think there's a lot of opportunity here as we bed down the store estate.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

So in summary, some encouraging early signs of trading improvement, plenty of activity underway to further improve the customer proposition, and still some significant efficiency opportunity ahead of us. We've built excellent momentum in our cost savings programme over the last year. I spoke earlier about the contribution of cost savings in delivering the retail profit growth we've just reported, but we're also increasingly confident about the momentum of the programme over the next two years. This isn't just about finding new ways to reduce costs. This is about the long term capital investments we're making in technology and infrastructure that deliver structural and sustained cost reduction and grow competitive advantage against those who are not in a position to invest in the same way.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

This is not a capability that's built overnight. We delivered around £350,000,000 of savings in the last year and we're well on track to deliver £1,000,000,000 of savings over the three years to March 27. We're well underway with the replatforming of our general merchandise logistics network, centralising stock in fewer locations, improving service to stores, bringing more automation and lowering cost. This will deliver savings of around £70,000,000 when the programme is complete. Investing to offset a known challenge for the industry, we are using video analytics technology to reduce shrink at self scanning locations.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And we will make further steps forward with SmartShop, with pay on handset trials reducing friction for customers and increasing digitization of the customer journey. Now SmartShop has been a key part of the transformation of the front end of our stores. We've invested in the tech and the customer experience behind SmartShop and self checkouts and over the course of over five years we have nearly doubled the amount of transactions going through self checkouts or SmartShop to nearly 75% whilst maintaining customer service metrics ahead of major competitors. Over the last year alone this has improved the volume per labour hour by 9%. This has enabled us to continue to invest in significant colleague pay increases while keeping our labour cost to sales ratio low.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

So let me finish with this slide. Over the last four years we've been transforming every part of this business. As a result, we're operationally stronger and more competitive, and we are now consistently delivering for our customers. The investments we are making in our stores, in our people, and in our technology and loyalty platforms are driving efficiency and are supporting our plans for growth. As we look to the year ahead, we are in a very strong competitive position and we are committed above all else to sustaining this.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

We expect to continue to outperform the market, supporting the profit and cash flow outlook we have shared with you today. Because putting good food at the heart of all we do is helping us to go further and faster than ever before as we take Sainsbury's to the next level. Thank you for your time, Leonard and I will now take your questions.

[Operator]

Hello, and welcome to the Sainsbury's twenty twenty four-twenty five Preliminary Results Announcement Analyst Q and A Call. On the call this morning is Simon Roberts, Chief Executive and Blonet Bergen, Chief Financial Officer. The first question is from Freddie Wilde at Jefferies. Please unmute yourself and begin with your question.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Morning, Freddie.

[Freddie Wild, VP - Equity Research at Jefferies]

Good morning, Simon and Blannard. Thank you for taking my questions. First of all, I guess I'm gonna be the only one on this call asking a price question or something. Why are you confident not to give a range today? Could you give a bit more details about what industry price assumptions are behind the $1,000,000,000 guidance?

[Freddie Wild, VP - Equity Research at Jefferies]

And are you assuming incremental as the price investment in that sort one set? Second, could you give a bit more detail about the half two weighting? Did I hear you correctly that you're assuming industry competition increases will be weighted into half one? And then finally, on the at least $500,000,000 free cash flow guidance, is it going to be a bit more and be $1,600,000,000 at least over the three years? Is that $1,600,000,000 going to be a bit more back end weighted?

[Freddie Wild, VP - Equity Research at Jefferies]

Should we think of retail free cash flow maybe being broadly flat in 2526? Sorry. A bit of a barrage there. Thank you.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Super clear, Freddie. Thank you. Thanks for the question. So, look, I'll take the first two, and then Blamed will pick up on free cash flow. So first of thanks.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

I I don't expect this to be the only question on on the market. So let let's talk about how we see how we see this. Look. I think the first thing to say is that we have spent as a team four years resetting our competitive price position. As you know, we've invested a billion pounds as we've done that.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And we've learned a huge amount actually about what Sainsbury's customers expect and now love about our value position. And couple of things within that have been, therefore, very important in how we look at the year ahead. The first thing to say is that above all else, we are gonna ensure that we sustain our competitive value position. We spent four years building this, and you can see in our results today the difference it's making. An 18%, you know, increase in the number of primary customers now doing their big trolley shop back in Sainsbury's.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

You can see the change in value perception. And you can also see across the rest of the elements that really drive customer experience, whether that be availability, whether that be quality, whether that be customer service, how all of those are coming together now to give customers real confidence. So the first the first message I would wanna just reiterate is above all else, we're gonna sustain our competitive position. Second thing is that we've learned a lot in those four years. And as a result of that, we've been able to robustly model the scenarios that we think are possible over the next period of time.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And I would say there's a lot of noise out there at the moment. But in the guidance that we have shared today, we are absolutely clear that within that guidance, we have the capacity for whatever we need to do this year. And that guidance of around a billion doesn't assume that nothing happens from here. You know, we've absolutely looked at the scenarios that might happen and ensured that we are prepared for any of those. I would just make the point, as we stand today a few weeks into this new financial year, we are in the strongest value position we have ever been against our major competitors, and we look obviously at all of the competitors in the market.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And when I look at the value index and we should remember the value index is across thousands and thousands of lines that we match our competitors to understand our relative price position every week. And when we look at that this year compared to last year, there's no change. And so a lot of noise out there, a lot of lot of work to make sure that we've looked at all the scenarios that could play out, and we are confident we've placed the capacity in this guidance to make sure that we can, you know, be ready for the year ahead. And, you know, I'm very happy for you to put, you know, a billion pounds in into your into your models, and we'll see over the course of the year what develops. We can obviously talk more in November as we see how the first six months plays out.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

On the second question on waiting, actually, the key point here for us is we've got our biggest year for a decade in adding new store space and also in moving many of our supermarkets around as we continue our program with moving space from general merchandise into food. You'll remember that in First Choice of Food, one of the big opportunities we have is to bring the full Sainsbury's assortment to so many more of our supermarkets. You remember a year ago, I was I was describing the fact that only 15% of our supermarkets carried our full food range. So we're now well on with that program to move space and general merchandise into food. And that means we've got a lot of that happening in the first part of this year, and inevitably, there'll be some disruption as we do that.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Moving supermarkets around is something you need to plan very carefully before you start to do that. The team have done a brilliant job preparing and planning for this. But we've got that space movement happening in the first half of the year. There'll be some disruption as we do that. We'll manage it very carefully.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And therefore, as we come through that program, the benefits will start to flow into the second half of the year. And that's that's the primary driver rather than anything happening in the market for the for the reason that we expect a back end weighting to our profit delivery this year. Blanid, free cash flow.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Right. So look, Freddie, we are delighted with the 531,000,000 that we've delivered this year. Really good quality cash flow. And then you can see in the working capital, the benefit we've delivered this year has come from some really good work that we've done in Argus. So we've reduced the Argus inventory by about 90,000,000 at the same time we improved availability.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

So that is the right combination that we want to achieve. So we're about 1,000,000,000 sorry. We're about one third into that 1,600,000,000 target. We're guiding to at least 500 this year. That gives us the flexibility to make choices that we want as as we travel through, but we are absolutely committed to the 1,600,000,000.0.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

And again, we're heading into year three of our working capital programs. We're very confident that we can hit that target.

[Freddie Wild, VP - Equity Research at Jefferies]

Perfect. Thank you both, and happy Easter.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Thank you. Yeah. And to you too. Thank you.

[Operator]

The

[Operator]

next question is from Sreedhar Mahamkali Please unmute yourself and begin with your question.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Srita, good morning.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Morning.

[Sreedhar Mahamkali, Managing Director at UBS Group]

Good morning. Good morning, Simon. Good morning, Sorry. I'm on my audio, and I'm just walking around the throat to find a place to sit. Apologies.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

We can hear you loud clear. Still on.

[Sreedhar Mahamkali, Managing Director at UBS Group]

Thank

[Sreedhar Mahamkali, Managing Director at UBS Group]

you very much. Yes. Sorry for the background noise. Works. Simon, you touched on the value index, which I think seems like a very large basket that you you clearly are looking at thousands of items.

[Sreedhar Mahamkali, Managing Director at UBS Group]

Can you elaborate a little bit more? When you said it hasn't really changed, as in it hasn't changed at all, but you've referred to noise. And then does that mean you've been keeping pace with that noise and hence protect the that reality's positioning? How should we think about it? But in the same vein, I think we definitely are picking up more inflation to come from the supply chain, particularly in the labor point of view from April onwards.

[Sreedhar Mahamkali, Managing Director at UBS Group]

How does that feature can in that sort of competitive activity? That's the first one. Secondly, I know you talked about green shoots in August. What have you assumed from August in the EBIT outlook? And maybe just third one, kinda standing back from it all from this year.

[Sreedhar Mahamkali, Managing Director at UBS Group]

I know it's very early and, you know, to be confident of even predicting this year is not that easy, let alone next. But I'm kinda trying to understand from the longer term investors. Knowing what we know, do you think it's still right to project or think of profit growth next year and beyond, admitting this year is gonna sideways move to downwards because of cost inflation and competitive activity? So how should we see sort of medium term perspective? Thank you.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Sure. Thank you. Okay. Let's let's take each of those each of those questions in terms. So, yeah, on your first question in terms of relative value, relative position, what we see happening as we've come into this new financial year for us.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Well, yeah, just to reiterate what so we were just describing just now with Freddie's question there. Look. We we, of course, all see a lot of noise out there, but the absolute substance of what we're seeing is that over the last few weeks, we've seen, you know, next to no change in the relative value position. And as I said earlier, when we look at our value, we're in the strongest position actually against our key competitors we've been at any point. We measure that value index every single week and includes every item where we can match with every other retailer.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

So it's a very high proportion of the products that we sell, and, obviously, it takes takes account of promotions and volumes within that as well. So we've got an accurate read. We look at weekly, And despite all that's happening out there in terms of the noise we hear, the reality on the ground is we're not seeing we're not seeing change yet. Within that, of course, as I've said, we have created I

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

think

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

it's wrong deal with it.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Having done maybe if you could just pop on some mutual. It's quite a lot of noise there. And we've created a plan to make sure that we've got the capacity for whatever plays out from here. As I said, in giving that guidance of a billion, we're not assuming nothing happens from here. So we've looked at various scenarios to make sure that in any scenario, we can do what we need to do because above all else above all else, we're gonna sustain the competitive position that we've built.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

So confident in the position, and, of course, we we take that that point of view because we've learned so much over the last four years. And one of the things we've learned so one of the points I would just emphasize is we took the hard decisions actually through that four year period when we made decisions to put lots of the value investment into high volume SKUs. And I would just double underline that point because what we find now through the Audi price match and also through next prices, your next prices, is that customers really trust the fact that the products they buy most often are the ones that are in the price match. And that really matters, of course, because it's driving perception. So these aren't SKUs that blow volume.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

This is all focused on things that people buy most often, and that's why value perception has moved as much as it has. To your question on inflation, of course, there's two two two factors to manage for in this in this context. One is that we're gonna sustain, above all else, our competitive position. Two is, as you say, particularly as we've come through the April, there's a lot of cost in the pipe. There's a lot of inflationary cost in the pipe with national insurance, regulatory cost change, and we're starting, of course, to see that feed through particularly in fresh feed.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And when we look at the rate of inflation over the last twelve months, in the last couple of months, you can definitely see that beginning to build. No no surprise there. It's what we predicted. It's what we planned for driven by, you know, the cost in the supply chain and also the cost in retailers. So, you know, we will expect that to clearly pass through, but as it passes through, we're gonna make sure, as I've said now, three or four times, we are gonna absolutely sustain our relative value position so that customers have got all the trust they need to keep doing their shopping with us in the way that they are.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

On your second question on Argos, look, I think, let's be clear, we had a challenging year last year. Three things really were the were the cause of that. One was a slowdown in online traffic volumes. That meant in the first half of the year, less customers came into the Argos brand than than we had hoped for, and that slowed down our volume at the top line. The second thing that happened is we clearly had a tough summer last year, very seasonal business in Argos, and that held back our ability to convert through the first half of the year, particularly into the summer.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And, of course, the third thing ongoing is is a cautious customer and the fact that on discretionary spends, you know, we've definitely seen customers over the last period of time hold back. So we're pleased and encouraged to see some improvement in the trend, obviously, to exit the year with positive sales in the fourth quarter. More importantly, underlying that, a real recovery in our online online traffic trends. And as you know, we're doing a huge amount to drive the transformation of August. That's all about improving the digital experience, expanding the number of products available on Argos, adding thousands of new products, particularly using the supply direct fulfillment platform to do that.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And we're also doing a lot of work on our costs and working capital. And so, you know, it's it's very much a key focus for for our team. We've begun to see some improvement in the top line, and our job of work over this next year is to is to keep improving the performance. And, obviously, I would just make the point that we're not expecting an improvement in profitability in the year ahead. So in the guidance that we've given you of around a billion, that assumes and that baked into that assumption is flat profit in August year on year.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And then, you know, third third point in terms of standing back and and the commitments we've made over the life of plan. Maybe I'll just say something on that and hand to Planet. But the key point here is, you know, we're committed over the life of the plan, the three years to March 27 to deliver, you know, the the leverage and the the free cash flow improvements that we committed to. Benedict, do you

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

want to add to that?

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

No. Just one or two little builds on that, Simon. Thank you. So first of all, we are completely focused on cash. So we've reaffirmed our commitment this morning of the 1,600,000,000.0 over the life of the plan.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

We've also reconfirmed this morning profit leverage over the life plan as well, and we are very focused on delivering that. It is really underpinned as well by our industry leading cost saving program. So you'll see from the results this morning, we have delivered 350,000,000 of that program. We're more than a third of the way through that program. And we've also got really good growth coming through from Nektar as well.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

So we're 40,000,000 into that incremental 100,000,000 as well. So all of those pieces are building blocks that contribute over the life of the plan.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Yeah. Thanks, Bonnie. And then maybe just on the on the saving investor win planning. I would say that we've we've actually grown a lot of confidence through the course of the year, not only in what we've delivered so far at 350,000,000, but also, as Banished said over the plans of the billion commitment that we've made, we've we've really built the foundations of certainty around our delivery towards achieving that objective to the course of the last financial year. So lots of progress happening there.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Thanks, Shriel.

[Operator]

The next question is from Rob Joyce at BNP Paribas. Please unmute yourself and begin with your question.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Hello, Rob. Good morning.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Morning, Rob.

[Rob Joyce, Equity Analyst at BNP Paribas]

Hi. Good morning. I see you both. Thanks very much for taking the questions. So I'm gonna go with three.

[Rob Joyce, Equity Analyst at BNP Paribas]

So in terms of just thinking about the guidance, guess, prior to the Azure announcement, I think consensus EBIT next next year retail was around the $1,100,000,000 level, so versus the $1,000,000,000 guide. Should we think about this guide then as embedding around $100,000,000 incremental investment since we've heard from ASDA and most recently, Tesco? Second one, just in terms of the guidance again, terms of you think about the volume number, what are you thinking about in terms of volume growth for the year and versus what the what are thinking about the market in that regard? And then finally, just, Argos, trying to square a couple of things. I mean, it looks like profit's down, I mean, 50,000,000 plus probably to square that number with 15% Sainsbury's growth.

[Rob Joyce, Equity Analyst at BNP Paribas]

With sales down, what, euros 120,000,000, that's quite a lot of deleverage in that business. I'm just wondering, is this a really low base for Argos, or is there something more structural here to sort of see that sort of 50% drop through on the negative profits? And quick thoughts on tariffs, FX. Do we have a tailwind here for Argos as we've got more supply potentially coming online and a weaker dollar? Thanks.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

I think that's four questions. Yeah?

[Rob Joyce, Equity Analyst at BNP Paribas]

Sorry. I was just a and b on the third one. Alright.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Okay. Let me let me take the the first on the guidance and the kind of volume position, and then maybe, Bennett, we'll start on Argos and make sure we give you a picture, then we'll come back to tariffs as your kind of supplementary question at the end. So, look, on on guidance, just, Rob, just, I guess, to first of to reiterate what I've what I've already said, which is that, you know, in reaching this this level of plan for the year and our guidance for the year, a couple of things have really guided us in in a clearly defined as the first is that we've learned a huge amount over the last four years about what it takes to reset pricing position and, you know, how to invest smartly to make sure that customers really notice the impacts that we wanted to have, and that's what's played through not only into our value perception chain, but a big change in customer behavior. So I would just really emphasize the point that this is something that we've been doing since 2020, '20 '20 '1, and you can see the change that we've we've made and what it's taken to get to this point.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

The second point I would just emphasize is that a recipe for success that you need in grocery in 2025 in The UK is definitely about great value, but it's about many other things as well. And that's why you see in our results today the progress we've made in areas like now record availability, leading customer satisfaction against our direct competitors, the work we're doing in loyalty and data, what we've been doing to build our technology platform, our long term building of relationships with suppliers. I would just, you know, add all of those into this picture about what it takes to be competitive and to deliver for customers day in, day out. Within the work we've done and what we've learned, we've done very robust modeling of the scenarios that we see. And, you know, we've given you our guidance today around a billion, and I'm not gonna be any more specific on that today because, of course, we will see what plays out over the next period of time, and we'll update you as we move through the year.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

But as I've said now a couple of times, despite the fact in the first few weeks of the year, we don't see any change in the relative value position and we look at all retailers, we're not assuming that nothing happens from here. So we've given ourselves the capacity within this guidance to continue to make the balance choices that we've always used as our guide. We're very happy for you to put a billion pounds in your models. If a less competitive reaction happens, we'll be able to deliver more than a billion pounds. And I would just also emphasize the point that Blunt had made, which is we have a very strong track record now on cost.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And if you look at our £350,000,000 worth of cost delivery in the year and, you know, compare that against what other commitments are out there, you'll see the strength of that cost position. And that, you know, that really helps make sure we've got within our capacity what we need to navigate the environment. Also, you'll see in our results, so the strength of our next performance as well. So within what we're delivering and within the capacity that we've set ourselves, you can see the contributing factors to that. In terms of volume, look, I think the first thing to say is we continue to grow market share.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And you've seen this morning in our guidance that we expect to continue to grow volume market share. We're adding new space. We're moving space from general merchandise into food. As we put more of our focus on first choice of food, adding more of our food ranges into more of our stores and more of our customers, that's one of the key underpins of our confidence that we'll continue to grow share. And as we look at the year ahead, you know, clearly, as you look at recent rates, you know, volume in the market slowed down a little bit, but we've continued to take share despite the fact we've come up against some really strong comps actually over the last period of time.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

It's also worth saying that the period we're in right now with a late Easter, a late Mother's Day this year, that's also they pushed some of the some of the the trade to later in this period, and we'll see that catch up again, I think, in the next in the next reads. On Argos, Lana, do you want

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

take that? Why don't I take that? Look, Rob, we talked about Argos having a tough year the last time we talked, and it has. And the traffic has improved, and you'll see that in some of the charts that we shared this morning. So we've taken some actions, we've seen that trend, and we've got positive momentum in the sales.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Sun is shining at the moment, so we've had a good start to the year. Let's see how the rest of the year plays out, but we've assumed that August will be flat year on year. And standing back and looking at, we took a lot of action this year to clear through some stock as well. So that's a little bit of a margin drag for us, but we exited the year really clean in our stock position. So we were particularly pleased with how we exited the year there.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

If I stand back and look at where is Argus today, we laid out the actions that we were going to take at Capital Markets Day. So you'll have seen some improvements on the digital journey. You'll have seen us talk about a lot of the new range that we're adding. And, we are looking really hard at the cost saving program at August as well to deliver a lot more momentum into that business. So look.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Let's see how the year plays out. We'll update you on the autumn, but we are budgeting for sort of flat year on year. But August is cash positive and profit positive to the group. So we're pleased with that. But more to do.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

I'd always like more cash, Rob.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Alright. Thanks. And then your last question then in terms of tariffs and FX, Rob, I'm gonna think a couple of things to say. I mean, look. The first thing is, you know, when we think back over the last four stroke five years, it feels like in every year, we've had unprecedented events to navigate, and this year is gonna be no different.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

I think that we'll need to see how this plays out in the next period of time. But for obvious reasons, you know, we're very focused on potential developments in this space. We've learned a huge amount. Again, if I think back sickly to, you know, '21 when we were navigating the huge escalation in freight costs around the world and what it took to get general merchandise products in The Far East and UK. The subsequent examples in not dissimilar space we've had since then, we've learned a lot about, you know, how we navigate these things without an impact either on our customers or on our performance.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

So let's let's see what happens here. We go into this period of time in a strong place as you're as you're just heard from Blanet. We've done a lot on the economics of the Argos business to make sure we improve what we're doing. And, you know, we will make sure, you know, if opportunities present themselves, that we we are clearly well placed to take advantage of them. Let's see what happens on the currency, as you say.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

The vast majority clearly of, you know, of our business in food isn't impacted by this. You know, clearly, source in The UK and Europe the vast majority of the food we sell. Clearly, we've got general merchandise categories. We'll be watching carefully and closely. Maybe there'll be some opportunities that flow as a result of some of the issues we're seeing.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

But as you just heard, say, and I said earlier on, we've assumed a flat profit number in the forecast. So if there was any upside to come, that would be, you know, in addition to the position we've started with.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Thanks, Rob.

[Rob Joyce, Equity Analyst at BNP Paribas]

Thank you very much.

[Operator]

The next question is from James Anstead at Barclays. Please unmute yourself and begin with your question.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Hello, James. Good morning.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Morning.

[James Anstead, MD - Equity Research at Barclays]

Morning, Simon. Morning,

[James Anstead, MD - Equity Research at Barclays]

A couple of questions, please. Simon, you mentioned you wouldn't sell anything more specific on guidance, so this might be a a wasted question. But it was quite striking. You you said you're very happy for us to stick a billion in our models, and it's it's also in a way quite striking. You're not assuming any profit growth from Argos.

[James Anstead, MD - Equity Research at Barclays]

I can totally understand why you'd take that view given people are being quite scarred by various you know, the lack of growth there in the last few years. But, I mean, is it fair to say, you know, if we look out the window and see the, you know, the nice weather and, look at how low Argos' profits fallen, you wouldn't be totally shocked or horrified if consensus ended a bit above a billion at the end of the day on retail profit? That would be kind of question one. And the second one would be regarding the the timeline for the total sale of the banking operations you're exiting. There's obviously various bits and pieces happening.

[James Anstead, MD - Equity Research at Barclays]

Is am I am I right to understand that we might get a kind of a final resolution and know the total proceeds as soon as next month? And if so, that presumably, at that point, we can look at the press release, deduct 250 from it or whatever that add that to the the buyback you promised. Is is is that the point when we'll get clarity on the the buyback for the year? Hope that makes sense.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Thanks. Thanks, James. Well, I'll I'll take the consensus. Just kind of opportunity to to rerun what we've already said. Yes.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And then, Valid, we'll definitely take the second one given she's been leading all of the work on on what we're doing at the bank and with the exit. So, yeah, forgive me, judge. I'm I'm gonna repeat what I've said, but I'll try and maybe add one or two things just to help as much as I can. Look. I think I think let's just take a step back and look at what we've just delivered.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

So despite what was a, you know, particularly challenging year in our boss for all the reasons that we've talked about, reduced online traffic trends, you know, of cautious consumer, as you said, you know, a bunch of weather impacts, none of which went our way. We've delivered exactly what we committed to with the growth in our retail operating profit over the course of the year of just over 715% growth in Sainsbury's. And so when you think about the backdrop of the the financial performance that's being delivered in the year, you know, we committed that we would deliver this level of improved performance at the start of the year. We saw some real challenges of the year unfolding, and yet we've still delivered exactly what we committed in Sainsbury's. And I think that just shows us a couple of very important points.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

The first thing is just how much that volume improvement in our core grocery business is now driving our profit leverage. 18% more customers are doing primary 18% more primary customers, you know, doing their big trolley shop in Sainsbury's week in, week out. We have our fifth record breaking Christmas in a row underpinned by leading availability. And, again, you know, that real step change in big trolley shoppers and customers. You've heard from Brandon and I the strength and now the maturity of our save and invest program delivering 350,000,000, 2 hundred and 40 9 million of cost savings in the year, well on the way to the billion that we committed to.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And so what I would just double underline is that in our guidance of around a billion, we've given ourselves the capacity to make sure above all else, we can sustain the strength, the position that we've created. We're absolutely clear of all the modeling that we've done, the scenarios that we need to plan for, and that's what we built into our into our guidance today. We've got a strong track record now of cost delivery, and that comes into this You know, I said earlier that our confidence in our billion pound delivery over the three years has significantly improved through the year. We've got outperformance in next year in the first year of the plan. Now I'm not gonna forecast the weather, James, but, you know, clearly, it's helpful that we've had a better start to this year.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Let's see what happens over the course of the next few months. What I would just say is we've built a strong plan for this year. Our team are really together on what we need to do to make sure we deliver for customers. And so, you know, we'll talk we'll talk in November about what we see happen between now and then, but we've planned rigorously. We're really resolute about what we need to do, and we come into this year in strong shape.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Blanet?

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

So, look, winding up a regulated bank is is never an easy task, James, as you'll appreciate. We had our part seven, court hearing yesterday, and we were successful in that. So really delighted with that. That allows us to complete the deal with NatWest, targeting the May 1 to achieve derecognition. We then begin the conversations with the regulator.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

So we are confident of the special dividend of 250,000,000 coming out and getting approved by the regulator that will be returned to shareholders, hopefully, before Christmas, if all goes according to plan. We will update in the autumn as to what we think the additional amount coming out this year could be that we would add to the buyback. And then as we travel through next year and wrap up the TSA agreements, understand the final running cost of the bank, there'll be some sort of a mock up as well that will come next year. But I would be confident in the $2.50 before Christmas, a little bit extra into the buyback, and then the the mock up next year was is what I'd say on that.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Thanks, James.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Great.

[Operator]

The next question is from Monique Pallard at Citi. Please unmute yourself and begin with your question.

[Monique Pollard, Director - Equity Research at Citi]

Hi. Good morning.

[Monique Pollard, Director - Equity Research at Citi]

Morning, Simon. Good morning, Planet. Three questions from me if I can. The first is just, you know, as we've talked about now, you've had really good performance in the fourth quarter in general merchandise and clothing. Obviously, a lot of that is your own internal actions, and then there's been that improvement in the traffic online for Argos, repositioning of the Habitat brand, etcetera.

[Monique Pollard, Director - Equity Research at Citi]

But just wondering if you're seeing anything that's making you think the consumer environment is actually also a bit better than maybe people were fearing. Second question is just whether you are seeing any benefit yet to product costs in your general merchandise business where you source from China. And then the final question I had, I just was interested in that slide, I think it's slide 51 where you showed, you know, the 9% increase in volume per labor hours that you'd achieved this year. And just wondered in your plan, so in your GBP 1,000,000,000 retail EBIT guidance, in your guidance in terms of the impact on the budget from the National Insurance, National Living Wage contributions, what you have assumed going forward for the volume increase per labor hour for FY '26? Thank you.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Thank you very much, Monique. Okay. Well, let's let's start on general merchandise and clothing, then we'll pick up early early thinking on impacts on the tariff work, then maybe, Bened, we can talk about where we are in our costs and our confidence for the year ahead. Look. So look.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

First of all, I think, you know, both say we're we're really encouraged actually by how we've exited the year, not just in our cost with an improving trend. Still lots to do. But also, as you say, Malik, in in our clothing business. And we've done a lot of work here to improve both our product design and also our availability. And in all honesty, we still think there's plenty more runway in front of us to improve, and that's what we're very focused on doing as a team.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Because we get Sainsbury's core food and grocery offer really working for customers, and more and more customers come back to their big trolley shop. So, of course, there's an opportunity now, 600 plus 15 new supermarkets 615 supermarkets by the end of the year to make sure we've got a really compelling range of general merchandise and clothing. And what we see as we exit this year in two is actually the product design improvements in in in women's wear are really starting to connect with customers now. We've begun a program with real focus on availability because, of course, when customers come into our store, we wanna make sure we've got the size in the product they wanna buy all the time. And so what I would say is, we're just getting going in clothing, and there's a lot more for us to do, and we're very focused on doing that.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

But we set a real opportunity to continue to grow too because customers really love what we do when we get it right. On general merchandise, we've seen, obviously, the first impact of beginning to move space from GM GM space into food. That obviously accelerates in the course of the year ahead, but let's just take a step back on what we're trying to do here. We're looking to improve our clothing range and the way we use our space. We're actually looking to improve our general merchandise offer in our stores.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And as Rian and the team within the way we run Sainsbury's takes responsibility for the general merchandise offer, We're really looking at how we actually improve what we do for customers whilst improving the trading intensity, improving the ranging, and making sure that we can really deliver an improvement both in how the product is for customers and how the experience comes across. Just as in Argos, we deliver the transformation plans there in the way that Graham's leading those. In terms of your question on the China impact, look, I think, honestly, Monica, it's a bit early to say yet. What I would say is that we have really deep experience in this space given all we've navigated in the last few years. Going back to, you know, as I said earlier to the earlier question, all of the kind of, you know, shipping and freight impacts we saw back off the pandemic, everything we saw, you know, through '22, '20 '3, and then the inflation crisis that came after that.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And so we've got teams who are really expert in this space. And, you know, if there are opportunities as things become clearer, of course, we'll take them. You know, we're very, very focused actually in Argos on how we drive our transformation through. And so as we navigate that environment, we'll be paying close attention given all of our experience to make sure that we get the best outcome that we can by the costs.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Great. Thank you, Ming. So there's really there's really two sides to answer this question. The first one is the cost, and second one is the CapEx and where we're putting our investment today to help us manage our costs in the medium and the long term. So if I stand back and look at our costs, the first thing is we have a billion cost saving program.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

When we put that program together, we were very, very clear on what we anticipate wage inflation will be in the market, what we needed to do to offset that wage inflation, knowing that we always want to pay a market leading rate to pay to our colleagues. So that was something that was always planned and budgeted for. And as we look out to the future, we think about our cost saving program against that backdrop and against that context, we built it in that way. And the second thing that I would say is there's some new costs to us that weren't part of our program. So that's the NIC increase that we've seen, and we've talked about that before as well.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

We'd anticipate some of that will get passed on to customers and as we travel through this year, and you've seen some of that inflation start those through already as well. But we'll monitor that carefully because we are absolutely committed to sustaining our pricing position in the market. If I turn to the other side of the equation and talk about that increased CapEx investment that we have in play at the moment, we talked about that at the Capital Markets Day, where are we investing? We're investing in automation of our depots. We're investing in a feature front end in stores.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

That allows us to manage our labor costs over time, and we're starting to see those those investments starting to pay some dividends and allow us to control our costs more clearly. All part of the 350,000,000 that we've delivered this year, all part of the £1,000,000,000 cost saving program that we have in place. Thank you.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Thanks, Monique.

[Operator]

The next question is from William Woods at Bernstein. Please unmute yourself and begin with your question.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Morning, William. How are you?

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Morning.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Will, can you hear us?

[William Woods, Head of European Retail & Food Delivery, Senior Analyst & Director at AB bernstein]

I think you should be able

[William Woods, Head of European Retail & Food Delivery, Senior Analyst & Director at AB bernstein]

to hear

[William Woods, Head of European Retail & Food Delivery, Senior Analyst & Director at AB bernstein]

me now.

[William Woods, Head of European Retail & Food Delivery, Senior Analyst & Director at AB bernstein]

Can you hear me now?

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

We can. Loud and clear. Good morning.

[William Woods, Head of European Retail & Food Delivery, Senior Analyst & Director at AB bernstein]

Perfect. Excellent. Thank you for taking the question. I've got three. I'll take them one by one if that's okay.

[William Woods, Head of European Retail & Food Delivery, Senior Analyst & Director at AB bernstein]

No. If you you've said that you've not really seen a change in your price index. But when I look at slide 28 where you show your value index, you've improved versus every single player in the market except from Asda, where I think year on year, slide six from last year, the value index has dropped by a hundred basis points going from five fifty to four fifty. Do you think your price gap to us is narrowing, or does this suggest that the overall market is not following us to down?

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Thanks, Will. Well, look, if you just take the slides you've referenced and look, first of all, which I think is kind of the key thing, how much progress we've made in transforming our value position since twenty twenty twenty one. You know, we've invested a billion pounds in the areas of the shopping trolley and basket that matter most to customers. And I do just wanna really emphasize that point because it's possible, isn't it, to invest pricing investment on SKUs that customers don't buy very often. It's also very important to make sure that you invest in the products that people already do buy very frequently.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And that's why our focus on fresh food in the center of the plates on high volume lines that customers buy most often, that has been our secret source in all honesty of really driving the value perception change that we've seen. And as you've heard us say every year since, and I say again now, we are absolutely committed above all else to sustaining our overall asset position and particularly that formula for us that really works on the products that people buy most often. As as to your question, we we rigorously look at value every single week as you'd expect, and we look at it against everyone in the market. We're not just looking at one other competitor. We're looking at every competitor because that's what customers do.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

The customers look at our prices, our value, our availability, our service, our store standards, our loyalty platform, our supplier relationships, and all of those things every week. And when we look at that, what we see is that we are exactly where we were on pricing versus a year ago versus everyone else. And, actually, as I said earlier, in the last few weeks, we've actually improved our relative value position against our key competitors. And we've not done anything in that period of time that we didn't plan to do, actually, so that as well. We're just six weeks into our new year.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

So, you know, we come into this Easter weekend in the strongest position we've ever been. And, you know, as I say, that's against everyone that we we look at. There's a lot of noise out there at the moment, but I think customers look at actual prices on the shelf. And what we continue to say is customers value the value where we're putting it. So that's that's on that's on the first question, Will.

[William Woods, Head of European Retail & Food Delivery, Senior Analyst & Director at AB bernstein]

Got you. And then, obviously, I think you've highlighted a number of times that a key part of your success over the last few years has been that focus on center of plate SKUs, your leading availability, which I think is not a highlight of what Astra is doing or what Astra has done. They've ditched Aldi price match, the loyalty card, things like that. When you look at it, I suppose, why are you worried about Astra and therefore guiding profits downwards? Or is it more a worry about the contagion effect to pricing in the overall market?

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Well, I I I think as I've said already, we look at all competitors. We don't look at any one competitor in particular because that's what customers do. You know, our job every day is to do the best we can for customers and to make sure we give our customers the value and the full offer of everything they expect. So in laying out our our guidance today, we're really confident in our position, And we're really confident that we've created the capacity to sustain our capacity position. And as I said in in giving the guidance of around a billion, we're not assuming that nothing happens.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

If we see less of a a passive reaction broadly in the market So any of the things happening out there, we'll be able to deliver more than a billion pounds. So I would just double down on the point here, which is that we've spent four years resetting our value position. We're really clear what it's taken to do that, and there's been a heavy lift to get to this point. It's a multiyear period of time to get to the changes that we've seen. And you remember on perception, actually, it took nearly three years for that really to start to connect with customers.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

So this is something that takes a long period of time to do. It's taken a lot of financial reinvestment that we've created through our save to invest plans that's fueled our ability to put a billion pounds more in price. And so we're in a position where we're really clear what our customers expect. Our job is to deliver them for them every day. We've priced the capacity in our plan so that we can navigate whatever we need to do.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And above all else, we're gonna sustain the strong competitive position that we've now built.

[William Woods, Head of European Retail & Food Delivery, Senior Analyst & Director at AB bernstein]

Excellent. And then just the final one is, obviously, when you've talked about if we see a greater competitive reaction, and that's where we get closer to the one or or around that 1,000,000,000. I suppose what what would worry you in terms of getting towards that? Is that irrationality in terms of cost pass through or in OpEx or commodities, or is it a movement more into those center of play items? I suppose, what what are you looking for to to to see the change in the market?

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Well, forgive me, Will, for repeating myself, but I am gonna repeat myself,

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

which is that there's a lot there's a lot

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

of noise out there. There's a lot of noise out there for sure. But, you know, when we look at the facts, the facts say that we are seeing a value index against all of our key competitors that hasn't moved compared to a year ago. And, you know, when we look at the strength of our value position, we are really confident in what we are delivering for customers. We expect to grow volume market share in the year ahead.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

We have both, you the value position, the leading availability, the leading customer satisfaction against our key competitors, the long term relationships with suppliers that guarantee availability. We shouldn't underestimate that point. You know, it's so important that when a customer our customers come into our stores, they can buy every day everything Whatever the prices are on the shelf in the end, the availability has to be there too. Right?

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Those two things have to go hand in hand together. So just At the risk of repeating myself, the capacity that we're pricing our guidance is to make sure we can navigate whatever we need to do. But above all else, we are gonna sustain our strong, competitive position because that winning combination we have of the value position, the availability, the quality, and the service is what customers in Sainsbury's now really trust and expect from us.

[William Woods, Head of European Retail & Food Delivery, Senior Analyst & Director at AB bernstein]

Excellent. Thanks very much, both, for for taking questions.

[Operator]

The

[Operator]

next question is from Manjari Dahar at RBC Capital Markets. Please unmute yourself and begin with your question.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Hello, Manjari.

[Manjari Dhar, Vice President, Equity Research at RBC Capital Markets]

Morning, Simon. Morning, Bennett. Thank you for taking my questions. I just had three as well, if I may. My first one was on sort of the level of supplier funded promotions in the industry.

[Manjari Dhar, Vice President, Equity Research at RBC Capital Markets]

Guess, how do you view the outlook of that and connect to that your share of those within it? And then secondly, on sort of store estate, as you look at your store estate now and weather and gaps, how do you see sort of the outlook for further opportunities to sort of fill out those gaps in the next year? And then finally, I wonder if you could give some more color on the level of disruption you see from or you have seen from the space rebalancing program where you have completed that or how long it lasts, what sort of impact it has? Thank you.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Thank you. Okay. Yeah. So and good question in terms of what we're doing with suppliers, how we're working in that space. And I think, look, the the key point here to say is that we've spent four years, you know, building out our transformation of sales, and a key part of that has been the way we work with suppliers.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And, you know, the principle of partnership is something that we fundamentally believe in, which is why we've been able to build out these long term supplier partnerships in so many fresh food supply chains, which is enabling us to make sure we've got, you know, guaranteed availability over the long term, to make sure we've been able to really further invest in British produced food, make sure that our farmers and suppliers are getting the confidence to reinvest in their own businesses. So that underpinning philosophy of partnership has been a really important part of what we've done. And then specifically on your question of funding, well, of course, Nectar Nectar is is such a game changer for us. If I think about the fact that we launched Nektar prices actually less than two years ago, it's the 04/29/2023. We first put 300 products out in our stores under NextPrices, and now we have over 9,000 products on NextPrices, and customers absolutely love NextPrices.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

We've got a huge surge in participation as you've seen in our presentation today. And, of course, it's the platform that gives customers certainty when they come and do their big trolley shop with us that they can get all the brands they want at great value. And, of course, as that's been such a key part of driving our volume, you know, supplier partners want to work with us to help fund that value position and to help support what we're doing with Nectar. So over 900 clients and partners we're working with now across Nectar, and we see, you know, actually more opportunities to do an even best job as we as we push forward our plans on it. You've seen in the first year of our plan how strong that delivery has been.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Moving to your second question

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

on the store estate. Well, of course,

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

you know, we wouldn't have made the decision. We wouldn't have taken to our board the proposal to open new Sainsbury's supermarkets. And so we were really sure in the strength of our grocery proposition. And over the last four years, we've really built the point now where, you know, we're winning lots of new customers. We're gaining market share, but there are lots of locations to your question in The UK where there isn't a Sainsbury's today and customers would like one.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And that's why the option is to acquire the home base and co op stores came at the right time for us. Ticked the box, most importantly, of the locations that we were looking for. Because these are long sought after locations that we've been able to find a store now to be able to put Sainsbury's into. We'll open 15 new supermarkets, in the year ahead, 25 convenience stores. We set ourselves very clear financial hurdles that we need to meet to make sure we deliver the returns that we've committed to.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And we have a very strong track record of opening new stores and delivering the returns that we expect. And so we're on track to make sure that we have not only delivered for customers, but we deliver for our shareholders, the commitments we've made as we spend capital to open stores in many new locations. And then on your last question, look. It's a very important program. We call it More for More, which is converting space in our existing Sainsbury stores to food back to that key reference point.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

When we started next level as a team, only 15% of our supermarkets carry our full food range, and so we're making progress now. We've done lots of, you know, proprietary work as we get into this phase. Of course, customers don't like it when we move a store around. So our job is to minimize the disruption as far as possible. We've done lots already to learn about how we do this, and so we've got a well coordinated plan through the first half of the year as we end intervene in stores and make sure we get through the program as expedient as we can, make sure we help customers as we bed down the new layouts, find things, and assure them we're on their side so the disruption is as minimal as possible.

[Manjari Dhar, Vice President, Equity Research at RBC Capital Markets]

Great. Thank you.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Thanks, Ajay. Just to finish the point there, of course, it does mean there was some back phasing to our profit delivery in the year because the impact of that disruption will mean as it comes through, we'll get the benefits in the second half of the year. Thank you.

[Operator]

The next question is from Clive Black at Shore Capital. Please unmute yourself and begin with your question.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Hello, Clive. Good morning.

[Clive Black, VP & Head - Consumer Research at Shore Capital]

Good morning. Thanks for taking the question, and I should say well done on navigating the last year. Three short questions that build on some of the points that others have made, but just for the purposes of clarity.

[Clive Black, VP & Head - Consumer Research at Shore Capital]

As a competitive feature, how important do you think security of supply is to Sainsbury's now? Secondly, in terms of the big trolley, what are the key enduring features of the big trolley? Because hard one. And then lastly, what do you actually need to see in August to do sequential profit growth? Thank you.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Right. Thank you. Okay. So to your first question in one word, vital. Absolutely vital that we have the security of supply that we need to make sure we can guarantee availability for customers.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And, you know, for all of us on the call, we know the challenges that are out there in the system at the moment, and that's the reason why we've invested so much time and focus in the word I used a few minutes ago, which is partnership, building long term partnerships with our suppliers and our farmers. Now we started this back in 2022 when we began our work in chicken. And since then, we've extended it to a number of our core supply chains in milk, in beef, in eggs, as you heard that we talked about this morning, in pork, as we've just announced in the last few weeks, and many more beyond. And that's because, as as as we've said, you know, we have both a responsibility and a commitment to make sure that we create the right supply chains to power the plans we have for Sainsbury's, and that's about supporting our farmers and producers, helping them to be confident to invest in their own in their own businesses, in their own capacity. And as a result of that, guaranteeing that we can have security of supply for our customers.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

We spend a lot of time in this space. We've got an expert team in food agri. They're doing a fantastic job supply chain by supply chain, building out the capacity and building out the partnerships that we're collectively building with our key partners. And we can see already and if I just think back to this this last few months and I look at the availability on our shelves of key products compared to our competitors, I mean, the difference is stark, particularly on products that people want to buy knowing they're produced in The UK, produced in Britain. You know?

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And so when we think about how competitive the sector is, of course, we've gotta be super sharp on price, and we will be and we are. But we've also gotta make sure we've got the best availability for our customers. And as I said in the presentation this morning, we've achieved record improvements in availability over the last year, powered both by the work we're doing on on-site partnerships and also the big change we've made through a technology new platform, Blue Yonder, which means we can forecast much more accurately. So those two components together, Clive, are really driving a big change for us in what we're able to deliver for customers. Yeah.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Really interesting question in terms of the enduring features that are really underpinning our win at the big trolley shop. Look, I think a number of them. If I was to pick out what I think are the key ones that most importantly of all, we fundamentally shifted customer value perception at Sainsbury's in the last four years. And so customers now have confidence across the whole trolley shop to know that when they shop with us, they get the value they expect and trust. That's the first.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

The second we've just talked about, which is one of the features of coming to do the big trolley shop is I can get everything I want. And therefore, the fact we've just delivered record availability, and we expect to continue to do that, is giving customers the confidence, particularly when they're busier, back in the office. You know, they've got one option to come to the store and get everything. We need to make sure we deliver on availability. Thirdly, loyalty and and next, particularly within that for us.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

As I've said, it's such a driver for customers and the reasons they shop with us and their confidence and their value in not only the the the value they're getting from Nectar, but also all the other benefits that come as part of the Nectar platform that we have. And then, you know, we should never underestimate. Some things in this industry have changed so much in the last decade or two. Some things haven't changed at all, which is when you come to the store, you wanna get great service. You wanna know that we care.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

You wanna know that we'll do everything we can to get things right for you. And one of the things our colleagues have done a phenomenal job on this year is delivering really strong levels of customer satisfaction, not just in our supermarkets, in our convenience stores, online, in every every moment, we're with a customer. And so those would be the components, I think, of, you know, what is really powering our offer. And, you know, it's one of the reasons why those strong foundations to growth, we think, have been so important in terms of what we've what we've built. And then should we should we turn to Argos and talk about our plans there?

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Big transformation underway in Argos, which is about extending our range and assortment that's already gathering real traction with customers. The work we're doing to improve the digital experience are really focused on making sure when customers come into Argos, they can find what they want and convert really well on our site. And then clearly, we're doing in terms of our financial delivery both to improve our operating model and become more efficient, and as Blum had said earlier, being even more efficient with our working capital. So plans underway there and really focus over the course of this year to really cement and continue to deliver that transformation.

[Clive Black, VP & Head - Consumer Research at Shore Capital]

Okay.

[Clive Black, VP & Head - Consumer Research at Shore Capital]

Consent time, but thank you very much for those answers.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Thanks very much, Clive.

[Operator]

And the final question will be from Corinne Elias at Barclays. Please unmute yourself and begin with your question.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Hello, Corinne. Good morning.

[Bláthnaid Bergin, CFO & Director at J Sainsbury]

Hi, Corinne.

[Karine Elias, Senior Analyst at Barclays Corporate & Investment Bank]

Hi. Good morning.

[Karine Elias, Senior Analyst at Barclays Corporate & Investment Bank]

Thank you so much for taking my questions. I think most of them have been answered, but just perhaps two broader questions. Simon, you referenced the noise in the market several times, in in the presentation, and Cisco basically have said that the environment has become more competitive but did rule out a price war as such. Just wondering how would would you agree with that, or how would you describe probably the broader environment? And then my second question is, obviously, ASA has been losing a lot of market share throughout the past, you know, years.

[Karine Elias, Senior Analyst at Barclays Corporate & Investment Bank]

They're doing different initiatives. Whether they are, you know, successful or not is yet to be seen. Would you view stabilized as the as a risk to you? I mean, you've talked a lot about how your confidence in that 1,000,000,000, but perhaps more so to the broader market. Thank you.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Thank you. Okay. Look. I think, you know, just forgive me if if any of this is is to repeat. But, John, just the first thing to say is that we all know this is a, you know, a very intensely competitive industry.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

It always has been and it always will be. You it's made up of, you know, many very strong competitors, and that that's what creates the conditions where it's always intensely competitive. I think it always has been. It always will be. And so, you know, I wouldn't particularly overemphasize that

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

I think there's a lot

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

of noise out there for sure. There's a lot of, you know, questions as to what's gonna happen next. But as I've said a number of times on this call today, of course, some competitors will want to try and improve their performance. That's inevitable. But that doesn't necessarily mean that will translate into change.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Let's let's see what happens. We're not complacent at all. We're very focused on what we need to do. We've placed the capacity and the plans to make sure we can sustain our strong value performance. You've heard me say that a few times this morning.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

But I'll just come back to the point. All the noise that's out there, we are coming into this year with a very strong plan. We're gonna make sure we sustain our value position. We're resolute, focused, and determined as a team for all we've built over the last four years. We'll continue and ever again, so we expect to grow, you know, volume market share over the course of this year.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Obviously, we've been lapping some strong comps. So not necessarily at the same levels we've been, but we do expect to continue to grow volume market share. And I just double underscore the points that the robust scenario planning we've done, combined with our differentiated cost saving plan, combined with all that we've learned, you know, give us a lot of experience on how about how we navigate this environment to make sure we can redeliver for our customers and our shareholders. Thank you. Thanks very much.

[Operator]

That was our final question. I'll now hand back to Simon Roberts for closing remarks.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Okay. Well, thank you so much, everyone, for joining us this morning. Conscious, everyone trying to head into the Easter weekend. It's gonna be a busy weekend, I think. But just to thank you for your time, and just, if I could, just a couple of key things to summarize from today's call.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

Firstly, to say, we're starting in a really strong competitive position with good momentum through delivering that consistency for our customers. We've talked about value, quality, service, availability. Secondly, and you've heard me say this a few times this morning, we are absolutely committed above all else to sustaining this competitive position, and we're gonna remain super sharp on price. And third, that we're clear in the guidance that we've given today for the year ahead that we have the capacity to do exactly that with our level of cost savings, a key differentiator versus competitors. So thank you again for joining us this morning, and I wish you a really great Easter weekend.

[Simon Roberts, CEO, Director & Chairman of Operating Board at J Sainsbury]

And have a great Easter. Thanks, everybody. See you soon.

Participants

Executives

• Simon Roberts, CEO, Director & Chairman of Operating Board
• Bláthnaid Bergin, CFO & Director

Analysts

• Freddie Wild, VP - Equity Research at Jefferies
• Sreedhar Mahamkali, Managing Director at UBS Group
• Rob Joyce, Equity Analyst at BNP Paribas
• James Anstead, MD - Equity Research at Barclays
• Monique Pollard, Director - Equity Research at Citi
• William Woods, Head of European Retail & Food Delivery, Senior Analyst & Director at AB bernstein
• Manjari Dhar, Vice President, Equity Research at RBC Capital Markets
• Clive Black, VP & Head - Consumer Research at Shore Capital
• Karine Elias, Senior Analyst at Barclays Corporate & Investment Bank