J Sainsbury Plc · LSE:SBRY
J Sainsbury — FY2023/24 Earnings Presentation
74 slides from J Sainsbury's earnings presentation, April 2024
Slide 1: Preliminary Results 2023/24
Preliminary Results 2023/24
Slide 2: Food First: What we've delivered
Introduction Financials Strategic outcomes Food First: What we’ve delivered Food firmly back at the heart of Sainsbury’s Grocery volumes Volume gains from More than doubled Widening lead in ahead of the market our competitors our rate of innovation customer satisfaction YoY % volume differential Sai
Slide 3: Food First: Stronger financial performance
Introduction Financials Strategic outcomes Food First: What we’ve delivered Stronger financial performance UPBT Net debt exc. leases Retail free cash flow Cost savings 19/20 23/24 £701m £596m £1.3 bn x2 £(200)m £586m £500m £0.6 bn 19/20 23/24 £(1,179)m 3 yr. avg. 3 yr. avg. 3 years 3 years to 19/20
Slide 4: Consistent and balanced choices are delivering for shareholders
Introduction Financials Strategic outcomes Consistent and balanced choices are delivering for shareholders Customers Colleagues Communities Suppliers • Most competitive ever on • £200m investment in • £36m raised for good • Extending support for price colleague pay causes British farmers • £220m inv
Slide 5: Winning from premium and limited choice competitors
Introduction Financials Strategic outcomes Winning from premium and limited choice competitors Limited choice retailers Customer satisfaction Premium retailers Volume switching gains/(losses) CSAT differential to full choice Volume switching gains/(losses) as % of volume1 competitors2 as % of volume
Slide 6: We're the most competitive we have ever been
Introduction Financials Strategic outcomes We’re the most competitive we have ever been Price index vs Aldi Price index vs Tesco Price index vs Lidl Improved Improved Improved 190 bps 1,620 bp s 1,230 bps November April November April November April 2020 2024 2020 2024 2020 2024 Price index vs Asda
Slide 7: We have great momentum as we move into Next Level strategy
Introduction Financials Strategic outcomes We have great momentum as we move into “Next Level” strategy Value perception starting to improve, highest point in six years1 Record market share gains2 +40bps +30bps +40bps Volume +20bps +20bps +10bps +10bps Value Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2023/24 2023/24 1
Slide 8: Next Level Sainsbury's – well placed to win
Introduction Financials Strategic outcomes Next Level Sainsbury’s – well placed to win Scale Volume Growing advantage growth customer base Targeted investment for growth Higher Winning Financial productivity culture strength J Sainsbury plc April 2024 Preliminary Results 2023/24 8
Slide 9: Our Commitments
Introduction Financials Strategic outcomes Our Commitments Food volume growth ahead of the market Deliver profit leverage from sales growth Customer satisfaction higher 26/27 vs 23/24 £1bn cost savings over three years to 26/27 Colleague engagement higher 26/27 vs 23/24 £1.6bn+ retail free cash flow
Slide 10: FY24/25 guidance
Introduction Financials Strategic outcomes FY24/25 guidance Resilient Argos + = Grocery volume growth Retail operating profit profitability ahead of the market, £1,010m to £1,060m driving profit leverage Growth in Nectar profit 5% to 10% growth contribution Retail free cash flow generation of at lea
Slide 11: Bláthnaid Bergin, Chief Financial Officer
Bláthnaid Bergin Chief Financial Officer
Slide 12: Retail sales growth by category
Introduction Financials Strategic outcomes Retail sales growth by category Grocery General Merchandise Clothing Total Retail sales growth 1 sales growth 2 sales growth sales growth 1, 2 FY FY FY 9.4% (0.5)% H1 H2 6.8% 10.1% 7.7% 5.9% 8.7% 1.1% H2 H1 (1.9)% (4.2)% FY H1 H2 (6.4)% FY 6.8% exc. ROI (8.
Slide 13: Retail underlying operating profit
Introduction Financials Strategic outcomes Retail underlying operating profit Operating profit growth ahead of sales in H2 Grocery sales growth by volume and inflation FY Grocery sales growth Retail Sales growth1 6.8% 10.1% Grocery sales growth 7.7% 8.7% 7.1% FY 5.9% 4.3% Volume Retail operating pro
Slide 14: Operating cost savings
Introduction Financials Strategic outcomes Operating cost savings £1.3bn savings target delivered, £350m delivered in 23/24 Cost savings and SG&A to sales SG&A to sales: (165)bps FY 25-27 commitment: £1bn cost savings over three years to FY27 SG&A / sales % Cost savings £m 17/18 18/19 19/20 20/21 21
Slide 15: Financial Services
Introduction Financials Strategic outcomes Financial Services UPBT YoY movement FY FY £m 2023/24 2022/23 Underlying revenue £638m £531m Underlying operating profit £29m £46m Interest Interest Net interest margin 2 4.7% 5.1% Income Payable Cost/income ratio 70% 66% Bad debt as a percentage of lending
Slide 16: Underlying profit before tax
Introduction Financials Strategic outcomes Underlying profit before tax UPBT YoY movement Underlying tax charge Earnings per Share1 UPBT up up 18% down £(17)m £(12)m 2% YoY YoY 3.9% YoY £40m Financial Finance £690m Retail Services costs £701m £185m 23.0p 22.1p £157m FY FY FY FY FY 22/23 FY 23/24 22/
Slide 17: Statutory profit before tax
Introduction Financials Strategic outcomes Statutory profit before tax Statutory profit before tax Items excluded from underlying results FY FY down £m 2023/24 2022/23 (15)% YoY Restructuring programmes (95) (106) £327m Impairment charges - (281) £277m Income recognised in relation to legal disputes
Slide 18: Cash flow metrics
Introduction Financials Strategic outcomes Cash flow metrics Retail Free Working Capital Net debt Net (debt) / funds Cash Flow movement including leases excluding leases £645m Bank FY FY dividend £50m £262m 22/23 23/24 £144m £639m FY 23/24 £595m £159m FY 22/23 £(5,554)m FY FY FY FY £(6,344)m £(200)m
Slide 19: Net debt and Retail free cash flow
Introduction Financials Strategic outcomes Net debt and Retail free cash flow FY FY £m 2023/24 2022/23 Net cash from operating activities 1,921 1,795 Capex guidance of which working capital movements 262 159 EV charging £70m of which pension cash contributions (44) (44) Capital expenditure (814) (71
Slide 20: Balance sheet metrics
Introduction Financials Strategic outcomes Balance sheet metrics Net debt / EBITDA1 Return on capital employed2 FY 25-27 commitment: higher return on capital employed 3.0x 8.3% 7.6% 2.6x FY FY FY FY 22/23 23/24 22/23 23/24 18/19 19/20 20/21 21/22 22/23 23/24 26/27 Guidance We continue to target leve
Slide 21: Shareholder returns
Introduction Financials Strategic outcomes Shareholder returns Dividend per Share Free Cash Flow FY 25-27 commitment: 13.1p 13.1p £500m+ Enhanced shareholder returns Buyback • £200m share buyback FY24/25 • Progressive dividend Dividend FY FY FY 22/23 23/24 24/25 J Sainsbury plc April 2024 Preliminar
Slide 22: Summary
Introduction Financials Strategic outcomes Summary What we’ve delivered Looking in 23/24 ahead • Retail operating margins up in H2 • 5% to 10% Retail operating profit growth • UPBT delivery above top end of • £500m+ Retail free cash flow guidance range • Enhanced shareholder returns: • Strong free c
Slide 23: Simon Roberts, Chief Executive
Simon Roberts Chief Executive
Slide 24: First choice for food
First choice First choice for food for food • More food choice for more customers • Consistent value, every day Attract many more people to choose • The leader in freshness, availability Sainsbury’s as the place they come to and innovation for good food – and play a leading role in creating a sustai
Slide 25: Growing customer numbers faster than any other full choice grocer
Introduction Financials Strategic outcomes First choice Growing customer numbers faster than any other for food full choice grocer More customers And more are shopping their full are shopping with us basket with us Customer numbers growth1 Growth in total shopper missions2 FY23/24 vs FY22/23 FY23/24
Slide 26: More customers are trusting us for great value
Introduction Financials Strategic outcomes First choice More customers are trusting us for great value for food Highest value perception score in six years1 >95% of big baskets include Nectar Prices and Aldi Price Match Doubled number of products in Aldi Price Match >85% of Nectar collectors are usi
Slide 27: Consistently outperforming the market at every seasonal event
Introduction Financials Strategic outcomes First choice Consistently outperforming the market at for food every seasonal event Highest ever Easter Grocery sales Winning Premium spend Volume differential to the market1 Taste the Difference volume growth YoY 4% Outstanding Easter performance 14% 3% •
Slide 28: Innovation in products and merchandising
Introduction Financials Strategic outcomes Innovation in products and merchandising Launched 1,200 new products, High returning new merchandising 40% in Taste the Difference and propositions Summer range Upgraded Beers, Wines & Spirits Destination Pet Destination Free From J Sainsbury plc April 2024
Slide 29: More for More: making more of our food range available
Introduction Financials Strategic outcomes First choice More for More: for food making more of our food range available to more of our customers Currently only 15% So we’re investing to bring more Unique opportunity to drive of our supermarkets of our range to more customers grocery volume gains off
Slide 30: New space delivering results
Introduction Financials Strategic outcomes New space delivering results New supermarkets at Southport and Talbot Green performing significantly ahead of expectations • Layout aligned to customer shopping missions • Fresh food space right-sized • Introducing new propositions in key categories • Impro
Slide 31: Delivering strong growth across all channels
Introduction Financials Strategic outcomes First choice Delivering strong growth across all channels for food Convenience Digital Groceries Online On Demand Sales Sales Sales £3.2bn 1 9% YoY £3.2bn 6% YoY £0.2bn 69% YoY +69% Sales, YoY growth • Rebalancing space towards fresh food • Market share3 Nu
Slide 32: General merchandise and clothing complementing the food offer
Introduction Financials Strategic outcomes General merchandise and clothing complementing the food offer GM in Sainsbury’s Tu Clothing Performance 23/24 vs 19/20 • Distinctive design and quality at surprising value Full price sales Gross Sales ASP margin Profit Stock • Driving impulse with Markdown
Slide 33: Progress against our Plan for Better priorities
Introduction Financials Strategic outcomes Progress against our Plan for Better priorities Healthy & Reduction in Reduction in Food Reduction in An inclusive place sustainable diets Carbon emissions Waste Plastic packaging to work and shop 85% healthy and Reduce Scope 1 & 2 Reduce food waste by Redu
Slide 34: Delivering our Plan for Better – Good Food for all of us
Introduction Financials Strategic outcomes Delivering our Plan for Better – Good Food for all of us J Sainsbury plc April 2024 Preliminary Results 2023/24 34
Slide 35: Loyalty everyone loves
Loyalty Loyalty everyone loves everyone • Personalised, rewarding and loves integrated loyalty • Joy and connection beyond transactions Build a world-leading loyalty platform • World-leading Nectar360 capabilities – more personalised, joyful, rewarding and transparent – for everyone • Strong coaliti
Slide 36: Transformational launch of Nectar Prices
Introduction Financials Strategic outcomes Loyalty Transformational launch of Nectar Prices everyone loves Nectar participation has Rapid rollout of Nectar c.7,000 significantly increased1 prices offers Nectar prices offers Total offers, 4 week rolling average £1.3bn Savings since >80% 8,000 280m la
Slide 37: Well positioned with our world-leading Nectar360 business
Introduction Financials Strategic outcomes Loyalty We are well positioned with our world-leading everyone loves Nectar360 business 224 Colleagues Loyalty Shopper Marketing 10 Years’ experience retained long-term advertising placements Nectar partnerships in and around store media 870 Brands 10 Agenc
Slide 38: Focused on delivering strong ROI for our clients
Introduction Financials Strategic outcomes Loyalty Focused on delivering strong ROI for our clients everyone loves Offsite Advertising Onsite Advertising Argos Advertising Digital Trading Platform Sainsbury’s Groceries Online Argos.co.uk Example: Example: Example: leading frozen food brand leading s
Slide 39: Investing to deliver the next stage of growth
Introduction Financials Strategic outcomes Loyalty Investing to deliver the next stage of growth everyone loves Leadership, people Agency partnerships Digitise instore media and capabilities Offsite partnerships Unifying our retail Measurement media capabilities & transparency J Sainsbury plc April
Slide 40: Delivering £100m incremental profit
Introduction Financials Strategic outcomes Loyalty Delivering £100m incremental profit everyone loves Forward guidance New partnership with The Trade Desk Forecast incremental profit contribution • Partnership to create Supply Hub on our Digital Trading Platform • Improves closed loop measurement fo
Slide 41: More Argos, more often
More Argos, more often • Famous for convenience Unleash and transform Argos around • Inspiring choice, always great value the three things that have always made it brilliant – curated range, famously • Supercharged digital capabilities convenient experience and great value – so more customers buy mo
Slide 42: A more resilient business in cyclical markets
Introduction Financials Strategic outcomes A more resilient business in cyclical markets More Argos, more often Sales performance Significant Improved by category cost base reduction profitability FY23/24 YoY sales growth % Argos SG&A to sales Argos Operating Profit Technology down Consumer electron
Slide 43: Opportunity to attract more customers, more often
Introduction Financials Strategic outcomes Opportunity to attract more customers, More Argos, more often more often Strong customer satisfaction1 Half of UK households shop at Argos 2 3per times year 17/18 18/19 19/20 20/21 21/22 22/23 23/24 1-2 items in their basket 1. YouGov BrandIndex – General R
Slide 44: Curated range, famously convenient experience and great value
Introduction Financials Strategic outcomes Curated range, famously convenient experience More Argos, more often and great value Showcasing our Driving awareness of Always delivering Wider ranging great value design-led leading delivery from premium brands own label proposition for customers J Sainsb
Slide 45: Supercharging digital capabilities
Introduction Financials Strategic outcomes Supercharging digital capabilities More Argos, more often Focused on driving Argos Improving the digital experience to website traffic and frequency grow conversion and basket size • Enhancing search engine optimisation UNDERWAY Tailoring and optimising • I
Slide 46: Continuing to transform our operating model
Introduction Financials Strategic outcomes Continuing to transform our operating model More Argos, more often Phase 1 – Phase 2 – Rebalanced our Delivering next level service, Example: Argos - Croydon Church Street store estate efficiency and stock flow Clustering stores in six types, 306 replacing
Slide 47: Consolidating and automating our distribution network
Introduction Financials Strategic outcomes Consolidating and automating our More Argos, more often distribution network General Merchandise distribution network Physical automation: Current Integrated robotic technology network automated network performing warehouse tasks Argos Sainsbury’s and Argos
Slide 48: Save and invest to win
Save and Save and invest to win invest to win • £1 billion of structural cost reduction Save £1 billion and invest in • Well-invested technology platform transforming our capabilities – taking protecting, competing and unlocking another big leap forward in efficiency, the next level productivity and
Slide 49: Strong track record, with further opportunities ahead
Introduction Financials Strategic outcomes Save and Strong track record, with further invest to win opportunities ahead Delivered £1.3bn cost savings, Further opportunities ahead, with upside in double the run rate of savings in previous 3 years1 automation and end-to-end productivity SG&A to sales:
Slide 50: Continue unlocking significant savings
Introduction Financials Strategic outcomes Save and Continue unlocking significant savings invest to win 22/23 23/24 24/25 Beyond E2E Process Optimisation Productivity Retail / Groceries Online Efficiencies Logistics Productivity Future Front End Automation and Intelligent Automation Technology Logi
Slide 51: Targeted investment in efficiency and growth to deliver strong returns
Introduction Financials Strategic outcomes Save and Targeted investment in efficiency and growth invest to win to deliver strong returns 1. Optimising our checkouts 2. Transforming and simplifying UNDERWAY our logistics network Availability Productivity 3. Implementing machine learning UNDERWAY fore
Slide 52: We make good food joyful, accessible and affordable
Introduction Financials Strategic outcomes Next Level Sainsbury’s We make good food joyful, First choice for food Loyalty accessible everyone loves and affordable More Argos, more often for everyone, Save and invest every day to win J Sainsbury plc April 2024 Preliminary Results 2023/24 52
Slide 53: Our Commitments
Introduction Financials Strategic outcomes Our Commitments Food volume growth ahead of the market Deliver profit leverage from sales growth Customer satisfaction higher 26/27 vs 23/24 £1bn cost savings over three years to 26/27 Colleague engagement higher 26/27 vs 23/24 £1.6bn+ retail free cash flow
Slide 54: Appendices
Appendices Sainsbury's
Slide 55: Guidance for 2024/25
Introduction Financials Strategic outcomes Appendix Guidance for 2024/25 Profit Tax rate • We expect retail underlying operating profit growth of between £1,010 • We expect an underlying tax rate of around 30 per cent million and £1,060 million, growth of between five per cent and 10 per cent Capita
Slide 56: Sales growth by quarter
Introduction Financials Strategic outcomes Appendix Sales growth by quarter Like-for-like sales growth 2023/24 2022/23 2023/24 Excl. Argos Republic of Ireland closure Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Like-for-like sales (exc. fuel) (4.0)% 3.7% 5.9% 7.8% 9.8% 6.6% 7.4% 4.8% 7.5% 10.0% 6.6% 7
Slide 57: Sales performance by category
Introduction Financials Strategic outcomes Appendix Sales performance by category FY FY FY 2023/24 Total sales performance 2023/24 2022/23 Change Proportion by category £bn £bn % % Grocery 23.7 21.7 9.4 66 General Merchandise 6.0 6.0 (0.5) 17 Clothing 0.9 1.0 (6.4) 3 Retail (excl. fuel) 30.6 28.7 6.
Slide 58: Cash flow and net debt
Introduction Financials Strategic outcomes Appendix Cash flow and net debt FY23/24 Cash Flow £m Working capital Net interest Adjustments for movements (116) paid, D&A, share based corporation tax payments & other 262 Non- (354) 1,190 2,156 underlying operating cash flows1 Proceeds on (814) disposal
Slide 59: Retail margin
Introduction Financials Strategic outcomes Appendix Retail margin As of 2 March 2024 FY FY 2023/24 2022/23 Change Retail sales (inc. VAT, inc fuel) £m 35,721 34,626 3.2% Retail sales (exc. VAT, inc fuel) £m 32,084 30,960 3.6% Retail underlying EBITDA1 £m 2,078 2,060 0.9% Retail underlying EBITDA mar
Slide 60: Financial metrics
Introduction Financials Strategic outcomes Appendix Financial metrics As of 2 March 2024 FY FY 2023/24 2022/23 Return on capital employed 1 8.3% 7.6% 2 Net debt to EBITDA 2.6x 3.0x Fixed charge cover 3 2.7x 2.7x Underlying tax rate 26.4% 22.8% 1. Return is defined as a 52 week rolling underlying pro
Slide 61: Financial Services
Introduction Financials Strategic outcomes Appendix Financial Services FY FY Group contribution basis 2023/24 2022/23 Change Total income 1 £445m £456m (2)% Financial Services UPBT Underlying operating profit £48m £55m (13)% £m, Group Contribution Customer deposits £4.2bn £4.7bn (11)% Customer lendi
Slide 62: Sainsbury's sales area and store numbers
Introduction Financials Strategic outcomes Appendix Sainsbury’s sales area and store numbers As at 2 March 2024 Supermarkets Convenience Total Area Area Area (‘000 sq ft) Number (‘000 sq ft) Number (‘000 sq ft) Number 1 1 1 Opening figures 23/24 20,691 595 Opening figures 23/24 1,961 814 Opening fig
Slide 63: Sainsbury's store estate
Introduction Financials Strategic outcomes Appendix Sainsbury’s store estate As at 2 March 2024 Number of stores Argos and Habitat store numbers Sq ft Under 10,000 to 20,001 to 40,000 to Over As at New Disposals/ As at sales area 10,000 20,000 40,000 60,000 60,000 Total 4 March 2023 stores closures
Slide 64: Sainsbury's store openings and closures
Introduction Financials Strategic outcomes Appendix Sainsbury’s store openings and closures FY 2023/24 Supermarket Convenience New stores New stores Hook Q1 Maghull - Central Square Local Q1 Manchester Islington Wharf Local Q3 Talbot Green Q4 Coventry Station Local Q1 Crouch End -The Broadway Local
Slide 65: Argos transformation
Introduction Financials Strategic outcomes Appendix Argos transformation Standalone Argos stores Collection stores in Sainsbury’s points 570 480 446 450 456 to 424 to 420 500 460 306 285 281 213 c.190 FY FY FY FY FY FY FY FY FY FY FY FY 19/20 22/23 23/24 24/25 19/20 22/23 23/24 24/25 19/20 22/23 23/
Slide 66: Breadth of our online grocery options
Introduction Financials Strategic outcomes Appendix Breadth of our online grocery options GOL GOL Chop Chop Deliveroo / Delivery Click & Collect Uber Eats / Just Eat Stores 263 321 291 1,123 Cities & towns 99% UK population 107 449 Average basket size £100-£110 £85-£95 £30-£40 £20-£30 Average weekly
Slide 67: Plc Board
Introduction Financials Strategic outcomes Appendix Plc Board Martin Scicluna Simon Roberts Bláthnaid Bergin Jo Bertram Brian Cassin Chair Chief Executive Chief Financial Officer Non-Executive Director Senior Independent Director Jo Harlow Adrian Hennah Tanuj Kapilashrami Keith Weed CBE Non-Executiv
Slide 68: Plc Board
Introduction Financials Strategic outcomes Appendix Plc Board Martin Scicluna Simon Roberts Bláthnaid Bergin Chair Chief Executive Chief Financial Officer Date of Appointment: Date of Appointment: Date of Appointment: March 2019 (joined the Board November 2018) June 2020 (joined the Operating Board
Slide 69: Plc Board
Introduction Financials Strategic outcomes Appendix Plc Board Jo Bertram Brian Cassin Jo Harlow Non-Executive Director Senior Independent Director Non-Executive Director Date of Appointment: Date of Appointment: Date of Appointment: July 2022 July 2022 (joined the Board April 2016) September 2017 Sk
Slide 70: Plc Board
Introduction Financials Strategic outcomes Appendix Plc Board Adrian Hennah Tanuj Kapilashrami Keith Weed CBE Non-Executive Director Non-Executive Director Non-Executive Director Date of Appointment: Date of Appointment: Date of Appointment: April 2021 July 2020 July 2020 Skills and experience Skill
Slide 71: Operating Board
Introduction Financials Strategic outcomes Appendix Operating Board Simon Roberts Bláthnaid Bergin Rhian Bartlett Graham Biggart Mark Given Chief Executive Chief Financial Officer Chief Food Commercial Officer Chief Transformation & Chief Marketing Officer General Merchandise Commercial Officer Oper
Slide 72: Operating Board
Introduction Financials Strategic outcomes Appendix Operating Board Simon Roberts Rhian Bartlett Graham Biggart Tim Fallowfield OBE Chief Executive Chief Food Commercial Officer Chief Transformation & General Company Secretary and Corporate Services Director Merchandise Commercial Officer See Append
Slide 73: Operating Board
Introduction Financials Strategic outcomes Appendix Operating Board Mark Given Prerana Issar Clodagh Moriarty Chief Marketing Officer Chief People Officer Chief Retail and Technology Officer Date of Appointment: Date of Appointment: Date of Appointment: June 2020 May 2023 June 2018 Skills and experi
Slide 74: Supplementary financial details
Introduction Financials Strategic outcomes Appendix Supplementary financial details 1. Weighted average number of shares 2. Dividend 3. Financial calendar FY FY Q1 Trading Statement 2 July 2024 2023/24 2022/23 2023/24 2022/23 (16 weeks to 22 June 2024) Weighted average number 2,334.8 2,312.6 Interim