Underlying profits up 7.8 percent; net debt £222 million lower, ahead of target; dividend up 7.8 percent
- Accelerating investment in store estate and technology while reducing net debt and maintaining our dividend policy
- Investing to improve more than 400 supermarkets this year
- New target to reduce net debt by at least £600 million over the next three years
- Customers continue to rate Sainsbury’s first for food quality and we outperformed the market in premium categories1
- Growth across all Sainsbury’s channels. Convenience and Groceries Online sales grew 3.7 percent and 6.9 percent respectively, with Convenience outperforming the market2. Supermarket sales grew one percent, benefiting from the addition of Argos stores inside supermarkets
- Completed a major reorganisation of Sainsbury’s store operations, introducing a more efficient structure and more flexible colleague contract, with industry-leading pay of £9.20 per hour
- Argos grew sales, outperforming3 a highly competitive and very promotional market
- Completed the integration of Argos, delivering £160 million in synergies. 281 Argos stores in Sainsbury’s supermarkets at the year end and increased the number of Argos collections points in Sainsbury’s convenience stores to 207 and total physical Argos points of presence to 1,200
- £4.7 billion of our sales start online and we are accelerating our investment in technology:
- Rolled out SmartShop self-scan to over 100 supermarkets
- Pay@Browse available in 162 Argos stores enabling customers to pay without queuing
- Trialling digital Nectar in Wales ahead of a broader roll-out later in the year
- Trialling the UK’s first checkout-free Grocery store
- Underlying profit before tax of £635 million, up 7.8 percent, driven by solid food performance, delivery of £160 million Argos synergies nine months ahead of schedule and reduced interest costs
- Retail underlying operating profit up 10.7 percent to £692 million
- Sainsbury’s Bank underlying profits of £31 million, in line with guidance
- Statutory profit after tax of £219 million, down from £309 million, due to non-underlying charges relating to legislation on Guaranteed Minimum Pensions; retail restructuring; Sainsbury’s Bank transition; Asda transaction and Argos integration
- Strong cash generation with retail free cash flow of £461 million, up 6.7 percent in the year
- Net debt reduced by £222 million to £1,636 million (including perpetual securities). Net debt reduction of £162 million before fair value movements on derivatives, ahead of £100 million guidance
- £220 million cost savings delivered in the year
- Underlying net finance costs reduced by 19.3 percent to £96 million
- Underlying earnings per share increased 7.8 percent to 22.0 pence per share
- In line with our policy of paying a dividend that is covered 2.0 times by underlying earnings, we propose to pay a final dividend of 7.9 pence per share, bringing our full year dividend to 11.0 pence per share, an increase of 7.8 percent
Capital Markets Day
- We are planning a Capital Markets Day on 25th September 2019 to further update on our progress
1Nielsen Panel, Total FMCG, Market Universe, Total Outlets, 52 weeks data to P13 18/19
2Nielsen EPOS Convenience Total Business, Quarterly data to Q4 18/19
3British Retail Consortium, market data 52 weeks ended 9th March 2019
|Group sales (inc VAT)||£32,412m||£31,735m||2.1%|
|Group like-for-like sales (inc VAT, ex fuel)||(0.2)%|
|Underlying profit before tax||£635m||£589m||7.8%|
|Underlying basic earnings per share||22.0p||20.4p||7.8%|
|Proposed final dividend||7.9p||7.1p||11.3%|
|Proposed full year dividend||11.0p||10.2p||7.8%|
|Net debt (including perpetual securities)||£1,636m||£1,858m||£222m|
|Return on capital employed||8.5%||8.4%||–|
|Group revenue (ex VAT, inc fuel)||£29,007m||£28,456m|
|Items excluded from underlying results||£(396)m||£(180)m|
|Profit after tax||£219m||£309m|
|Basic earnings per share||9.1p||13.3p|
Mike Coupe, Group Chief Executive of J Sainsbury plc, said: “I am pleased to report that we have increased profits, reduced net debt and increased the dividend. This is testament to the hard work of colleagues across the business and I would like to thank them for their commitment during this year of change.
“We completed the integration of Argos that we set out in 2016, delivering £160 million in synergies ahead of schedule. We completed a major transformation of how we run Sainsbury’s stores and have made significant improvements to store standards in recent months, which remain a focus. Customers continue to rate us top for quality food and we are growing our premium ranges. We are also focused on reducing costs so that we can invest to make commodity products better value for our customers.
“We will increase and accelerate investment in the core business, investing to improve over 400 supermarkets this year. £4.7 billion of our revenue now comes from our online businesses and we are increasing investment in technology to make shopping across Sainsbury’s, Argos and Sainsbury’s Bank as quick and convenient as possible. We will also continue to strengthen our balance sheet and are making a new commitment to reduce net debt by at least £600 million over the next three years.
“I am confident in our strategy and also clear on what we need to do to continue to evolve the business in a highly competitive market where shopping habits continue to change.”
In line with our policy of paying a dividend that is covered 2.0 times by underlying earnings, we propose to pay a final dividend of 7.9 pence per share, bringing our full year dividend to 11.0 pence per share, an increase of 7.8 percent.
Retail markets are highly competitive and very promotional and the consumer outlook continues to be uncertain. However, we are well placed to navigate the external environment and remain focused on delivering our strategy.
Fourth Quarter Trading Statement data for the 9 weeks to 9 March 2019
|Like-for-like sales growth||2017/18||2018/19|
|Like-for-like sales (excl. fuel)||1.1%||0.9%||0.2%||1.0%||0.6%||(1.1)%||(0.9)%||(1.0)%||(0.2)%|
|Like-for-like sales (inc. fuel)||1.2%||1.8%||2.6%||3.4%||3.0%||0.3%||(0.5)%||0.0%||1.5%|
|Total sales growth||2017/18||2018/19|
|Grocery (exc. Pharmacy)||2.3%||2.1%||0.5%||2.0%||1.2%||0.4%||(0.6)%||0.0%||0.6%|
|Total Retail (excl. fuel)||1.2%||1.3%||0.8%||1.7%||1.2%||(0.4)%||(0.2)%||(0.4)%||0.4%|
|Total Retail (inc. fuel)||1.4%||2.3%||3.2%||3.9%||3.5%||0.8%||0.0%||0.6%||2.1%|
A. All sales figures contained in this trading statement are stated including VAT from 2018/19and in accordance with IFRS 15.
We are delivering the strategy we set out in November 2014. The market is competitive and the way customers shop continues to evolve in the ways we anticipated.
Our strategy is based on five pillars: knowing our customers better than anyone else; great products and services at fair prices; being there for our customers whenever and wherever; colleagues making the difference and our values making us different.
As shopping habits evolve, we continue to update our strategic priorities. This will help to develop and differentiate our customer offer and to grow and create value for our shareholders. Our five updated priorities are:
- Differentiate food and grocery through quality, value and service
- Grow General Merchandise and Clothing
- Offer our customers easy access to financial services
- Generate efficiencies to invest in our digital future
- Strengthen the balance sheet
Living healthier lives: 78 percent of our own-brand products are labelled with green and amber traffic lights, just one of the ways we are helping our customers to eat and live well
Sourcing with integrity: Winner of the Marine Stewardship Council’s UK Supermarket of the Year for the fifth year in a row
Respect for our environment: 100 million+ items with reduced or zero plastic packaging through design changes this year, with further reductions in the pipeline
Making a positive difference to our community: A record 94 percent of our stores partnered with local charities this year
Great place to work: As part of our efforts to be the most inclusive retailer, 31.4 percent of senior roles are now held by women, making progress towards achieving our target of 40 percent.