J Sainsbury Plc · LSE:SBRY
J Sainsbury — H1 2023/24 Earnings Presentation
64 slides from J Sainsbury's earnings presentation, November 2023
Slide 1: Nectar Prices
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Slide 2: Simon Roberts, Chief Executive
Slide 3: Progress against priorities
Progress against priorities 02 Financial highlights 03 Strategic progress JSainsbury ple Interim Results 2023/24 3
Slide 4: Our priorities
Progress against priorities Our priorities Food Brands that CY First * Better value and innovation * Customer and profit focus * Structurally lower operating * Underpinned by buying * Supporting the core food costs to fuel investment in benefits and lower cost business the core to serve * Cutting co
Slide 5: Food is firmly back at the heart of Sainsbury's
Progress against priorities Food is firmly back at the heart of Sainsbury’s Strongest market share gains since Consistently growing volumes launching Food First strategy ahead of the market Grocery volume share’ Weekly volume growth differential’ 11.8% 8% . ° ° 11.6% ., 6% 5 % 11.4% *. 4% *. 11.2% 2
Slide 6: We're gaining volume from all of our competitors
Progress against priorities We're gaining volume from all of our competitors Sainsbury’s net volume switching H2 H1 H2 Qi Q2 21/22 22/23 22/23 23/24 23/24 Winning volume Losing volume Source: Nielsen Panel data, Sainsbury's to/ from net volume switching—Total FMCG excl. Kiask and Tobacco. Trended 12
Slide 7: We're at our most competitive on price
Progress against priorities We’re at our most competitive on price Price index vs Aldi Improved 1,600bps Price index vs Tesco Price index vs Lidl Moly November _____ September 2020 Price index vs Asda Improved 4801 November —__________y september 2020 November ____ September 2023 2020 Price index vs
Slide 8: We're number one for our customers
Progress against priorities We’re number one for our customers Value Quality Range Product Colleague Overall Perception Ranking Ranking Availability Availability Satisfaction Ranking Ranking Ranking Ranking | = a » Sept Sept 2023 Source: CSAT Competitor Benchmark, September 2020/21 vs September 2023
Slide 9: Argos resilient despite seasonal challenges
Progress against priorities Argos resilient despite seasonal challenges Sales performance by category Market share’ H1 YoY % up 0.6% pts Yoy Technology Consumer electronics 2023/24 Household electricals Seasonal and Garden aeoes Toys and Celebrations Home & Furniture Total Apr May Jun Jul Aug Sep 1.
Slide 10: Strong progress on our key metrics
Progress against priorities Strong progress on our 8 key metrics Delivering for customers and driving stronger financial outcomes Operational Financial Grocery market share performance (@@O) UPBT growth Ga Strong customer satisfaction scores (@@O) 200bps+ reduction in retail operating cost to sales
Slide 11: Bláthnaid Bergin, Chief Financial Officer
Slide 12: Retail sales growth by category
Financials Retail sales growth by category Grocery General Merchandise’ Exc. Argos D> Republic of Ireland closure 2.5% 11.0% > Exc. Argos ROI 4.9% 8.9% Exc. Argos ROI (0.6)% Qi Q2 Qi Q2 1, Asa result of the closure process of the Argos business in the Republic of Ireland: Clothing H1 (8.4) % Qi Q2 +
Slide 13: Group performance overview
Financials Group performance overview Retail underlying Financial Services Underlying profit Statutory profit operating profit operating profit’ before tax before tax H1 H1 H1 H1 H1 H1 H1 H1 22/23 23/24 22/23 23/24 22/23 23/24 22/23 23/24 All figures £m 1. Underlying Financial Services operating pro
Slide 14: Balance sheet metrics
Financials Balance sheet metrics Net debt Net funds / (debt) Net debt / EBITDA’ Return on capital including leases excluding leases employed £m £m H1 FY H1 22/23 22/23 23/24 (5,643) H1 FY 22/23 22/23 (6,165) H1 H1 H1 H1 (6,344) 22/23 23/24 22/23 23/24 Highbury and Dragon property transaction £1,042m
Slide 15: Balance sheet metrics
Financials Balance sheet metrics Retail Working Capital Earnings per Share’ Dividend per Share Free Cash Flow movement £m £m H1 H1 H1 H1 H1 H1 H1 H1 22/23 23/24 22/23 23/24 22/23 23/24 22/23 23/24 1. Underlying basic earnings per share JSainsbury ple Interim Results 2023/24 15
Slide 16: Financial Services
Financials Financial Services H1 H1 UPBT YoY movement £m 2023/24 2022/23 §m Underlying revenue £318m £254m Lending Underlying operating profit £13m £19m TE Net interest margin? 47% 5.2% Cost/income ratio 70% 67% Bad debt as a percentage of lending? 2.1% 2.2% Total Capital Ratio* 18.1% 17.3% Customer
Slide 17: Items excluded from underlying results
Financials Items excluded from underlying results H1 H1 £m 2023/24 2022/23 Restructuring programmes (32) (33) Income recognised in relation to legal disputes = 30 Disposal of mortgage book (14) - IAS 19 pension income , 21 35 Property, finance and acquisition adjustments (40) 4 Total items excluded
Slide 18: Net debt and Retail free cash flow
Financials Net debt and Retail free cash flow Guidance Capital expenditure (excluding Financial Services) in FY23/24 to be £750-£800 million. H1 H1 FY £m 2023/24 2022/23 2022/23 Net cash from operating activities 1,156 1,232 of which working capital movements 284 360 Capital expenditure (389) (297)
Slide 19: Capital allocation framework
Financials Capital allocation framework Invest in the business to support our strategy 1 2 A solid investment grade balance sheet 3 Deliver strong dividends for shareholders Selectively invest in projects to grow or strengthen the business 4 i Return surplus cash to shareholders Capex to remain in r
Slide 20: Summary and Outlook
Financials Summary and Outlook H1 performance * Strong Grocery sales and volume growth across both quarters * Resilience in General Merchandise and Clothing despite tough weather comparatives * Headwinds in Financial Services * Underlying profit before tax flat year-on-year * Strong underlying retai
Slide 21: Strategic progress
@ Super fresh % Nectar Prices
Slide 22: Strategic progress
Strategic progress a || & |) rot) | een eee Firs! Deliver Invest Fa cna) Food + Improve real and perceived value * Deliver Plan for Better commitment Qi First for mone WJ * Tailor price, proposition and operations * Increase innovation pace to catchments and local customers * Better value and innova
Slide 23: Food First delivering volume growth ahead of the market
Strategic progress . oe a Food First delivering volume growth ahead of the market First Grocery volume change H1 23/24 vs 22/23 Sainsbury’s . Lidl Market Tesco Asda = Morrisons Source: Nielsen panel data, Grocery volume change- Total FMCG excl. Kiosk and Tabacco. 28 weeks to 16 September 2023 vs 28
Slide 24: More customers are shopping with us
Strategic progress . ; a More customers are shopping with us Growth in primary and secondary customer numbers ahead of full-choice competitors I Growth in Primary Customers § Growth in Secondary Customers Sainsbury’s Asda Tesco Morrisons ‘Source: Nielsen panel data, Total FMCG excl. Kiosk and Tobacc
Slide 25: Gaining volume across the full basket
Strategic progress Gaining volume across the full basket fst Volume growth differential H1 23/24 vs 22/23 Produce Meat, Fish & Poultry Frozen Centre of Plate Dairy Packed Impulse Bakery Meal Solutions ‘Source: Nielsen panel data, Total FMCG excl. Kiosk and Tobacco. Volume growth differential to the
Slide 26: Customers are noticing our improved value, innovation and service
Strategic progress Customers are noticing our improved value, innovation and service Growth in total shopper missions H123/24 vs 22/23 Later Next After today 1-2 days 2 days Source: Nielsen panel data, Total FMCG excl. Kiosk and Tobacco. Shopper missions growth by volume. 28 weeks to 16 September 20
Slide 27: Consistently inflating behind key competitors
; ; — ; ; a Consistently inflating behind key competitors ist Year on Year ASP Inflation of Top 100 products Asda raat ] Morrisons Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2022 2023 Source: Nielsen panel data, Total FMCG excl. Kiosk and Tobacco. Top 100 SKUs by retailer. Average Selling P
Slide 28: The vast majority of our customers now shop with Nectar Prices
Strategic progress The vast majority of our customers are now shopping with Nectar Prices 3 million+ new Digital Nectar collectors since Nectar Prices launch nectar prices >£450m c.£10 Customer savings —_ Saving ona typical since launch £80 weekly shop — Your é.c<y pete >£80m Now available on Custom
Slide 29: Innovation driving outperformance
Strategic progress . eos a Innovation driving outperformance Premium Own Label volume growth ahead of all competitors Sainsbury’s Tesco Market Waitrose +8.4% Taste the Difference Q2 - volume growth Morrisons Source: Nielsen Panel Premium Own Label Volume Growth YoY and Differential - Total FMCG excl
Slide 30: New Charcuterie and Cheeseboard displays
KITCHEN DELI AUBERGINE, MOZZARELLA & PESTO PASTA Rich & enol oe pe ; oe GRAB & GO DINNER 2: ae | PICK YOUR LUNCH FRESH AND FULL OF FLAVOUR FALAFEL & HoumoussaLap ‘Armatic creary New Charcuterie and Cheeseboard displays First Interim Results 2023/24
Slide 31: Festive food range
First ee" SLOW COOKED CRANBERRY TARTS lk Brined appedin wrod Bacon {ee € I A TIPSY | ‘ : TOFFEE i 8 BAO'S OF HOLLY Interim Results 2023/24
Slide 32: Plan for Better: Supporting British farming
Strategic progress Plan for Better Supporting British farming Revolutionising beef production 25% Lower carbon footprint? * New Taste the Difference Aberdeen Angus range largest lower carbon beef range in the UK * Decade of development and five years of production * Reducing carbon through superior
Slide 33: More engaged and productive colleagues
Strategic progress More engaged and productive colleagues ist Greater colleague engagement +8ppt Overall improvement 1, Source: eSAT scores July 2023 vs April 2021 (baseline) 2. Reduction inlabour cost/sales (excl. fuel) % Q2 23/24 vs Q1 21/22 Improved productivity Sainsbury’s labour costs/sales % 8
Slide 34: Delivering leading customer satisfaction
Strategic progress . . . . & Delivering leading customer satisfaction Supermarkets Customer satisfaction index a @ 38 4 gq. @ 22/23 22/23 22/23 22/23 23/24 23/24 Source: Competitor benchmarking survey. Overall Supermarket and Online customer satisfaction % score Online Customer satisfaction index Qi
Slide 35: Prioritising online service and efficiency
Strategic progress Prioritising online service and efficiency Online sales back in growth Items picked per hour 7.8% Qi Q2 Q3 Q4 Qi 22/23 22/23 «22/23 22/23 23/24 YoY % growth rate 1, Source: Competitor benchmarking survey, Graceries Online custamer satisfaction % scores 12 weeks to 16 September 202
Slide 36: Know and serve our customers better
Strategic progress Save to First Invest connected to ‘Customers ont? C¥4D Brands that , SS Deliver met 7.) | Sainsburys Bank * Customer and profit focus ° a * Supporting the core food habitat business Focus on food, coalition Reduce cost to serve simplify and and data monetisation Improve profit del
Slide 37: Nectar360: Retail media driving significant incremental growth
Strategic progress Nectar360: Retail media driving significant incremental growth Powered by Digital Nectar 14m+ digital collectors 11m March September 2023 2023 On track to deliver additional profit contribution +£90m additional profit by March 2026 es PBEB 21/22 22/23 23/24 24/25 25/26 This chart
Slide 38: Argos transformation delivering for customers
Strategic progress Argos transformation delivering for customers Digital first, omni channel retailer Market leader in same day delivery Rebalancing the store estate PAID ONLINE? #3" 1,100 points of presence Collect here most visited El Tu UK retail Ea 43: Argos stores ! | 281 | A in Sainsbury’s web
Slide 39: Tu Clothing: Colder and wetter weather challenge
Strategic progress Tu Clothing: Colder and wetter weather challenge to summer performance Weekly sales performance Stable full-price sales Growing our branded —_ participation in store proposition at pace * More customers shopping Ges third party brands N * Creating fashion destination V \WN \ hubs
Slide 40: Structural change to accelerate cost reduction
Strategic progress Structural change to accelerate cost reduction * Reduce operating costs to fuel investment in the core * Transform our approach to costs and radically simplify our organisation * Structurally lower operating . . costs to fuel investment in * Reduce retail operating costs to sales
Slide 41: Continued momentum: £1.1bn of cost savings to date
Strategic progress Continued momentum: £1.1bn of cost savings to date On track to deliver £1.3bn of cost savings 1.3bn x2 0.6bn 3 years 3 years to 19/20 to 23/24 £L.1bn of costs savings delivered since March 2021 H1 progress on End to End transformation Data centre migration and consolidation Expert
Slide 42: Our priorities
Strategic progress Our priorities Food Ox Brands that CY First aes Deliver * Better value and innovation * Customer and profit focus * Structurally lower operating * Underpinned by buying * Supporting the core food costs to fuel investment in benefits and lower cost business the core to serve * Cutt
Slide 43: Interim Results 2023/24
Interim Results 2023/24
Slide 44: Appendices
Slide 45: Guidance for 2023/24
Appendix Guidance for 2023/24 Profit * We expect underlying profit before tax of between £670 million to £700 million * We expect full year Financial Services profits to be lower than last year Space * We expect to open three supermarkets and around 25 new convenience stores, and to close around one
Slide 46: Sales growth by quarter
Appendix Sales growth by quarter Like-for-like sales growth 2022/23 2023/24 Excl. Argos pepubiicof ireland closure Qu a2 @B a4 Qu a2 HI a a2 Hi Like-for-like sales (exc. fuel) (4.0)% 37% 59% 7.8% 98% 66% 84% 10.0% 6.6% 8.5% Like-for-like sales (inc. fuel) 29% 7.7% 68% 5.9% 39% «2.2% «= 3.2% 4.0% 2.2
Slide 47: Sales performance by category
Sales performance by category Total sales performance Appendix by category 2ozsiba 2022s Chan proportion ge Proportion Grocery £bn 12.4 113 10.1% 67% General Merchandise £bn 29 29 11% 15% Clothing £bn 0.5 0.5 (8.4)% 3% Retail (excl. fuel) £bn 15.8 14.7 7.7% 85% Fuel sales £bn 27 3.4 (19.6)% 15% Reta
Slide 48: Retail margin
Appendix Retail margin As of 16 September 2023 H1 H1 2023/24 2022/23 Change Retail sales (inc. VAT, inc fuel) £m 18,547 18,084 2.6% Retail sales (exc. VAT, inc fuel) £m 16,665 16,154 3.2% Retail underlying EBITDA £m* 1,082 1,087 (0.5)% Retail underlying EBITDA margin %? 6.49 6.73 (24)bps Retail unde
Slide 49: Financial metrics
Appendix Financial metrics H1 H1 2023/24 2022/23 Return on capital employed* 7.9% 77% Net debt to EBITDA” 2.6x 2.9x Fixed charge cover? 2.6x 2.7x Underlying tax rate 27.6% 23.5% 1. Return is defined as a 52 week rolling underlying profit before interest and tax. Capital employed is defined as group
Slide 50: Financial Services
Appendix Financial Services Financial Services UPBT £m, Group Contribution H1 H1 Group contribution basis 2023/24 2022/23 Change 30 Total income? £231m £232m 0% Underlying operating profit £23m £30m 4 (24)% e— Bank Customer deposits £4.8bn £4.6bn tT 4% Customer lending? £4.8bn £€5.1bn L (6% Active c
Slide 51: Sainsbury's sales area and store numbers
Appendix Sainsbury’s sales area and store numbers As at 16 September 2023 Supermarkets Convenience Total Area Area Area (000sq ft) Number (‘000 sqft) Number (000sqft) Number Opening figures 23/24" 20,610 595 Opening figures 23/24* 1,961 814 Opening figures 23/24" 22,571 1,409 New stores 25 1 New sto
Slide 52: Sainsbury's store estate
Appendix Sainsbury’s store estate As at 16 September 2023 Number of stores Argos and Habitat store numbers Sqft Under 10,000to 20,001to 40,000to Over Asat New _Disposals/ Asat sales area 10,000 20,000 40,000 60,000 60,000 Total 4 March 2023 stores closures 16 Sept 2023 Convenience 821 - - - - 821 Ar
Slide 53: Sainsbury's store openings and closures
Sainsbury’s store openings and closures HY 2023/24 Supermarket New stores Hook Qu Appendix Convenience New stores Maghull - Central Square Local Qu Coventry Station Local Qu Bewdley - Dog Lane Local Q Henfield - High Street Local Q Oxford - Walton Street Local Q2 Wapping Lane Local Q2 Ketley - Holyh
Slide 54: Argos transformation
Appendix Argos transformation Standalone Argos stores stores in Sainsbury’s c.180! FY FY FY 19/20 22/23 23/24 19/20 =. 22/23 1. exc. Republic of Ireland stores 23/24 Collection points FY FY FY 19/20 22/23 23/24 JSainsbury ple Interim Results 2023/24 Appendix 10
Slide 55: Breadth of our online grocery options
Appendix Breadth of our online grocery options Click & Collect GOL GOL Chop Chop Deliveroo / Delivery Click & Collect —_— Uber Eats / Just Eat Stores 264 321 96 847 Cities & towns 99% UK population 38 297 Average basket size £100-£110 £85-£95 £30-£40 £20-£30 Average weekly orders 530k 45k 157k JSain
Slide 56: Plc Board
Appendix Plc Board eS 4 ‘ Martin Scicluna Simon Roberts Blathnaid Bergin Jo Bertram Brian Cassin Chair Chief Executive Chief Financial Officer Non-Executive Director Senior Independent Director ha Jo Harlow Adrian Hennah Tanuj Kapilashrami Keith Weed CBE Non-Executive Director Non-Executive Director
Slide 57: Plc Board: Martin Scicluna
Plc Board Martin Scicluna Chair Date of Appointment: March 2019 (joined the Board November 2018) Skills and experience Martin joined the Board as Chairman Designate and Non- Executive Director on 1 November 2018. He was appointed Chair of the Board on 10 March 2019 and is also Chair of the Nominatio
Slide 58: Plc Board: Jo Bertram
Plc Board Jo Bertram Non-Executive Director Date of Appointment: July 2022 Skills and experience Jo joined the Board on 7 July 2022 and is amember of the Nomination and Governance Committee and the Corporate Responsibility and Sustainability Committee. Jo is a highly talented strategic business lead
Slide 59: Plc Board: Adrian Hennah
Plc Board Adrian Hennah Non-Executive Director Date of Appointment: April 2021 Skills and experience Adrian joined the Board on 1 April 2021. He is Chair of the Audit Committee and amember of the Remuneration Committee, and the Nomination and Governance Committee. Adrian has significant financial an
Slide 60: Operating Board
Appendix Operating Board Simon Roberts Chief Executive Blathnaid Bergin Chief Financial Officer Tim Fallowfield OBE Company Secretary and Corporate Services Director Mark Given Chief Marketing Officer Rhian Bartlett Food Commercial Director Prerana Issar Chief People Officer => ) a ~~ Graham Biggart
Slide 61: Operating Board
Appendix Operating Board Simon Roberts Rhian Bartlett Chief Executive Food Commercial Director See Appendix 13 Date of Appointment: November 2020 + + Skills and experience Blathnaid Bergin . Rhian joined the Operating Board in Chief Financial Officer November 2020, having returned to See Appendix 13
Slide 62: Operating Board: Tim Fallowfield OBE
Operating Board Tim Fallowfield OBE Company Secretary and Corporate Services Director Date of Appointment: September 2004 Skills and experience Tim joined Sainsbury's in 2001 as Company Secretary, having previously held the position of Company Secretary and General Counsel at Exel plc, the global lo
Slide 63: Operating Board: Clodagh Moriarty
Operating Board Clodagh Moriarty Chief Retail and Technology Officer Date of Appointment: June 2018. Skills and experience Clodagh joined the Operating Board in 2018 and was appointed as Chief Retail and Technology Officer in March 2023, combining the leadership of Technology with the Group's Digita
Slide 64: Supplementary financial details
Appendix Supplementary financial details 1. Weighted average number of shares 2. Dividend H1 H1 2023/24 2022/23 2023/24 2022/23 Interim 3.9p 3.9p Weighted average number 2,332.5 2,314.3 Final 9.2p of shares (m) Total 13.1p Diluted weighted average 2,386.9 2,350.2 number of shares (m) The Interim div