Sainsbury’s First Quarter Trading Statement for the 16 weeks to June 25, 2022

Strong points:

* Trading in line with expectations, unchanged outlook, good performance of the grocery volume market share

* First Quarter Trading Statement for the 16 weeks to June 25, 2022

* Trading in line with expectations, unchanged outlook, good performance of the grocery volume market share

simon robertgeneral manager of J Sainsbury plcsaid: “We really understand how difficult it is for millions of households right now and that’s why we’re investing £500 million and do everything we can to keep our prices low, especially on products that customers buy most often. We are working to reduce costs across the business so that we can continue to invest in the areas that matter most to our customers. The progress we are making in improving value, quality, innovation and service is reflected in the improvement in our market share by grocery volume.

“Our customers watch every penny and pound, but they also turn to Sainsbury’s when they want to treat themselves, especially on special occasions. We are truly connected to our customers and through the successful execution of our plan, we have outperformed the market at key events such as Jubilee1.

“I would like to thank my colleagues for their brilliant efforts this quarter. We are proud to be the first major supermarket to pay living wages to all co-workers, regardless of where they live – and to have raised co-worker pay at Sainsbury’s by 25% and Argos by 39% in over the past five years. The pressure on household budgets will only intensify over the remainder of the year and I am very clear that doing the right thing for our customers and colleagues will remain at the top of our agenda.

Highlights and Financial Outlook

Good grocery performance, with sales down 2.4% from last year’s high COVID-19 levels and 8.7% from pre-pandemic sales

General merchandise and apparel sales in line with expectations, with the sales trend improving after the first five-week period in which non-essential retail businesses were closed during the lockdown last year

Argos sales down 7% in last 11 weeks of quarter, down 19% in first five weeks

Sainsbury’s general merchandise sales are down 5% in the past 11 weeks, down 30% in the first five weeks

Apparel sales down 2% in past 11 weeks, down 26% in first five weeks

Outlook unchanged; continue to expect FY22/23 underlying pre-tax profit of between £630 million and £690m

Q1 22/23 YoY(vs Q1 21/22)	Q1 22/23 Yo3Y(vs Q1 19/20)

Total sales growth %		16 weeks to June 25th	16 weeks to June 25th

Grocery	 			(2.4%)			8.7%

Total General Merchandise	(11.2%)			(6.2%)

GM (Argos)	 		(10.5%)			(4.5%)

GM (Sainsbury's Supermarkets)	 (14.6%)		(13.8%)

Clothing			(10.1%)			3.9%

Total Retail (excl. fuel)		 (4.5%)			5.4%

Like-for-like sales excl. Fuel	 (4.0%)	

Strategic and Operational Highlights

Food first:

Good volume market share performance versus strong prior year comparison and ahead of the market versus pre-pandemic2, reflecting improved value and product innovation. A structurally advantaged store base and reputation for quality also ensures customers consistently choose Sainsbury’s to help them celebrate special occasions and redeem for everyday treats.

Assess

Invest more £500 million over two years for March 2023 keeping our prices low, funded by cost savings; continue to swell behind competitors3

Sainsbury’s Quality, Aldi Price Match campaign driving secondary customer basket growth4, matching Aldi on over 240 products, including the top 20 products customers buy most often

More Price Lock items held at stable prices than any of our top 4 competitors

Value index against Aldi the strongest of all time; improved by 350 basis points year over year5

Improved in-store value messaging through new value aisles and stronger promotional signage

Quality & Innovation

Launched 371 new products during the quarter, including 95 new Taste the Difference products. The performance of our new Summer Edition range has been strong with many ranges exceeding expectations

Sales of Taste the Difference were up more than 12% year-on-year during Jubilee week as customers chose to celebrate with traditional British summer produce. Taste the Difference The prosecco and clotted cream scones were particularly popular and we sold a record number of Taste the Difference strawberries

Sales of beer, wine and spirits during Jubilee week were the highest on record outside of Christmas and Easter, with Pimms, sparkling wine and champagne selling particularly well

Service

Supermarket customer satisfaction continues to outperform our major competitors6

Store improvement program promoting efficiency and providing better service to customers. A greater range of products in areas such as foods of the world and improved layouts making it easier for customers to find what they want

Online grocery order numbers continue to normalize as more customers return to the store. Sales were 94% above pre-pandemic levels and we are pleased with our market share performance as we retain customers acquired during the pandemic

Brands that deliver:

Argos sales down 4.5% from 19/20, maintaining the improving trend from pre-pandemic levels seen in Q4 21/227 and reflecting better availability

In line with our plan to reduce costs and improve convenience, we closed six standalone Argos stores and opened five Argos stores in Sainsbury’s supermarkets, bringing the total to 405 stores in supermarkets.

Opening of our seventh new local distribution center, enabling more customers to buy from Argos faster and easier

Sainsbury’s general merchandise fell 14.6%, reflecting tough foreclosure-related comparisons and a strategic decision to rebalance store space allocation and exit the entertainment category

Clothing sales were up 3.9% from the pre-pandemic period and were down year-on-year, thanks to competitors closing during the lockdown. Women’s dresses, vacation wear and swimwear fared particularly well with the increase in travel

Nectar creates value by offering personalized pricing to over 1 million repeat customers through My Nectar Pricing. Nectar’s digital recordings are now at 9.6 million

Financial Services continues to make progress on our business simplification plan. We are cautiously increasing unsecured loan balances and Travel Money volumes are recovering faster than expected

Plan for better:

Launch of our new community and partnership strategy, focused on the fight against food poverty, with a total of £2 million donated to stores to support projects in their local community

Extending our successful food donation partnership with Neighborly to convenience stores

Establishment of a partnership with UK the charity Newlife at all supermarkets, where Tu clothes not sold in stores will be recycled or resold to support disabled and terminally ill children

To reduce plastic, we launched refillable handwash sachets, which are expected to save a total of 28 tonnes of plastic each year and replaced five Fairtrade banana packs of plastic bags with paper strips, eliminating 25 million single-use plastic bags.

Detailed sales information

2021/22	2022/23

Q1	Q2	Q3	Q4	Q1 YoY	Q1 Yo3Y8

Like-for-like sales growth

Like-for-like sales (excl. fuel)	1.6%

(1.4)%	(4.5)%	(5.6)%	 (4.0)%	

Like-for-like sales (inc. fuel)	8.4%	 3.0%	0.6% 	2.7%	 2.9%	

Growth in total sales

Grocery	0.8%	0.8%	 (1.1)%	 (1.6)%	 (2.4%)	8.7%

Total General Merchandise	(1.4)%	(11.4)%	 (16.0)%	 (21.1)%	 (11.2%)	(6.2%)

GM (Argos)	(3.7)%	(12.0)%	(16.1)%	(20.4)%	(10.5%)	(4.5%)

GM (Sainsbury's Supermarkets)	11.2%	(8.0)%	(15.7)%	(24.1)%	(14.6%)	(13.8%)

Clothing	57.6%	9.2%	 (2.7)%	 (9.3)%	 (10.1%)	3.9%

Total Retail (excl. fuel)	1.6%	(1.7)%	(5.3)%	(6.2)%	 (4.5%)	5.4%

Fuel	95.1%	36.1%	 47.5%	80.1%	 48.3%	26.9%

Total Retail (inc. fuel)	8.5%	2.7%	 (0.1)%	 2.2%	 2.5%	8.9%

Investor Relations

james collins

+44 (0) 7801 813 074

Media

Rebecca Reilly

+44 (0) 20 7695 7295

Remarks

Certain statements made in this announcement are forward-looking statements. These statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from the expected future events or results referred to in these forward-looking statements. Except as otherwise required by applicable law, regulation or accounting standards, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

A conference call will be held at 9:15 a.m. (Paris time). To listen to the audio webcast, please subscribe to https://sainsburys-q1-trading-statement-22-23.open-exchange.net/registration. A transcript and a recorded copy of the conference call will be available after the conference call.

Sainsbury’s to announce half-year interim results September 17, 2022 on November 3, 2022.

1 Nielsen Panel Year-over-year unit growth: Sainsbury’s growth Total points of sale growth. Jubilee week from May 28 to June 4, 2022

2 Nielsen Panel Data, Grocery Volume Growth. 15 weeks for June 18, 2022 against 15 weeks for June 15, 2019. Total FMCG excluding K&T

3 Nielsen Panel Data, Top 100 SKUs by Retailer. Annual growth in average selling price

4 Secondary buyers – Volume growth. Nielsen panelTotal FMCG (excl. Kiosk & Tobacco), 12 weeks to 28 May 22. Market universe: Total points of sale

5 Reality of Values: March 6 – June 25, 2022 against March 7 – June 26, 2021. Edge by Ascential; internal modeling

6 Competitor Benchmarking Survey. Overall supermarket satisfaction. Data T1 22/23

7 Argos Q4 21/22 Yo2Y vs Q4 19/20 sales growth of (4.7)%

8 Q1 22/23 vs Q1 19/20