J Sainsbury plc · LSE:SBRY
J Sainsbury — H1 2021/22 Earnings Presentation
54 slides from J Sainsbury's earnings presentation, 2021
Slide 1: Interim Results 2021/22
Interim Results 2021 / 22
Slide 2: Simon Roberts, Chief Executive Officer
Simon Roberts Chief Executive Officer
Slide 3: A strong first half
Financials Strategic highlights A strong first half Growing A strong operating Delivering on Agile and momentum performance our priorities adapting at pace Market share gains Strength in digital Food First Cost savings Brands that Deliver Save to Invest Connected to Customers Plan for Better 3 J Sai
Slide 4: Kevin O'Byrne, Chief Financial Officer
Kevin O’Byrne Chief Financial Officer
Slide 5: Agenda
Agenda 01 02 Financial highlights Strategic highlights 5 J Sainsbury plc Interim Results 2021/22
Slide 6: Retail sales growth by category
Financials Strategic highlights Retail sales growth by category Grocery General Merchandise Clothing Total Retail 1 +9.1% +1.1% +33.6% +7.3% 11.3% 5.6% 57.6% 10.3% (5.8)% Q1 Q2 Q2 +0.2% Q1 3.4% 6.0% +9.1% (1.4)% 1.6% Q2 +0.8% (4.7)% 15.5% Q1 Q1 Q2 9.2% (1.7)% 0.8% 0.8% 1.0% YoY Yo2Y Q1 Q2 Q1 Q2 (11.
Slide 7: Group performance overview
Financials Strategic highlights Group performance overview Retail underlying Financial Services Underlying profit Statutory profit/ operating profit 1 operating profit 1 before tax loss before tax up 20% Yo2Y up 56% Yo2Y down 6 % YoY up 23% YoY 555 20 19 371 541 523 HY HY 301 437 19/20 21/22 238 HY
Slide 8: Group performance overview
Financials Strategic highlights Group performance overview Retail free cash flow Underlying working Net debt Dividend capital movement excluding leases per share 943 571 640 3.2p 3.2p 554 267 135 HY HY HY HY HY FY HY HY 20/21 21/22 20/21 21/22 20/21 20/21 27 20/21 21/22 HY 21/22 All figures £m 8 J S
Slide 9: Underlying profit before tax
Financials Strategic highlights Underlying profit before tax UPBT Yo2Y movement £m Financial Interest Services Retail H1 19/20 H1 21/22 UPBT UPBT 9 J Sainsbury plc Interim Results 2021/22
Slide 10: Financial Services
Financials Strategic highlights Financial Services UPBT YoY movement £m 19 Cost action H1 21/22 Funding UPBT costs (55) H1 20/21 UPBT Credit Reduced Travel provisions lending Money and ATMs 10 J Sainsbury plc Interim Results 2021/22
Slide 11: Items excluded from underlying results
Financials Strategic highlights Items excluded from underlying results H1 H1 Guidance £m 2021/22 2020/21 Restructuring, impairment and integration one-off Restructuring programmes (32) (266) costs of £900m-£1bn from FY20/21 to FY23/24 (c. £300m cash), with £75m-£100m costs and Impairment charges (Re
Slide 12: Net debt and Retail free cash flow
Financials Strategic highlights Net debt and Retail free cash flow H1 H1 FY • Working capital reversal from strong £m 2021/22 2020/21 2020/21 FY2020/21 position Net cash from operating activities 1 1,056 1,418 • Net debt exc. lease liabilities down £613m from FY 2020/21 of which working capital move
Slide 13: Balance sheet targets
Financials Strategic highlights Balance sheet targets • On target for £950m+ net debt reduction over four years to March 2023 1 Net debt exc. Lease liabilities • Average free cash flow £500m+ p.a. three £m years to March 2025 • Medium-term leverage reduction target: 2,125 (£603m) Net debt/EBITDA 2 l
Slide 14: Summary and Outlook
Financials Strategic highlights Summary and Outlook Strong first half performance Outlook unchanged • Grocery sales up year-on-year reflecting tailwinds from sustained in-home consumption and investments made in the food offer • 2021/22 UPBT at least £660m • Market share gains • Average free cash fl
Slide 15: Simon Roberts, Chief Executive Officer
Simon Roberts Chief Executive Officer
Slide 16: A strong first half
Financials Strategic highlights A strong first half Growing A strong operating Delivering on Agile and momentum performance our priorities adapting at pace 16 J Sainsbury plc Interim Results 2021/22
Slide 17: Customer behaviour continuing to normalise
Financials Strategic highlights Customer behaviour continuing to normalise Supermarket transactions and basket size trends Basket size, £ Transactions, m FY 19/20 FY 20/21 H1 21/22 17 J Sainsbury plc Interim Results 2021/22
Slide 18: Continued growth in digital sales, significantly ahead of 19/20
Financials Strategic highlights Continued growth in digital sales, significantly ahead of 19/20 Total Digital Groceries Online Argos Digital SmartShop Nectar Sales Sales Sales Sales Digital users Flat YoY up 13% YoY down 13% YoY up 4% YoY Users up 46 % YoY up 108% Yo2Y up 128% Yo2Y up 42% Yo2Y up 30
Slide 19: Growing ahead of the market on a one-year and two-year basis
Financials Strategic highlights Growing ahead of the market on a one-year and two-year basis Grocery volume growth 1 H1 21/22 vs H1 19/20 and H1 20/21 25% 20% 15% 10% Yo2Y 5% YoY 0% -5% Total grocers Sainsbury’s Tesco Asda Morrisons Aldi Lidl 1 NielsenIQ Panel volume growth YoY and Yo2Y. Total FMCG
Slide 20: Customer satisfaction
Financials Strategic highlights Customer satisfaction Supermarkets Online Customer satisfaction index 1 Customer satisfaction index 1 Availability Quality Speed Sainsbury’s +10% +4% +6% YoY 2 YoY 2 YoY 2 Sainsbury’s Tesco Asda Asda Morrisons Tesco Morrisons Q1 Q2 Q3 Q4 Q1 Q2 Q3 to date Q1 Q2 Q3 Q4 Q
Slide 21: We are delivering on our priorities
Financials Strategic highlights We are delivering on our priorities Purpose Driven by our passion for food, together we serve and help every customer Priorities Plan for Better Valued behaviours Own it Make it better Be human Measures Operational • Grocery market share performance Financial • UPBT g
Slide 22: Delivering against our plan
Financials Strategic highlights Delivering against our plan Food back at the heart of Sainsbury’s Portfolio brands supporting food, delivering for customers and shareholders in their own right Structurally lower cost to sales ratio (by at least 200bps) Pursue partnerships or outsource where faster R
Slide 23: 8 key metrics
Financials Strategic highlights 8 key metrics Delivering for customers and driving stronger financial outcomes Operational Financial Grocery market share performance UPBT growth Strong customer satisfaction scores 200bps+ reduction in retail operating cost to sales Maintain strong colleague engageme
Slide 24: Better value and innovation
Financials Strategic highlights • Improve real and perceived value • Deliver Plan for Better commitment for money • Tailor price, proposition and operations • Increase innovation pace to catchments and local customers • Better value and innovation • Grow Online capacity and extend • Adapt supermarke
Slide 25: Strong grocery volume gains from competitors
Financials Strategic highlights Strong grocery volume gains from competitors Switching gains 1 Volume switching 28 weeks to H1 21/22, Yo2Y (m) Volume switching 28 weeks to H1 21/22, YoY (m) Asda Asda Tesco Tesco Morrisons Morrisons Aldi Lidl Lidl Aldi 1 Nielsen FMCG (excl. Kiosk & Tobacco)- Volume s
Slide 26: Delivering better value to customers
Financials Strategic highlights Delivering better value to customers Price Lock Core, high volume Sainsbury’s Quality, investment Aldi Price Match + + 26 J Sainsbury plc Interim Results 2021/22
Slide 27: Value: investment in key centre of plate and fresh categories
Financials Strategic highlights Value: investment in key centre of plate and fresh categories Core, high volume investment Meat, Fish & Poultry Produce • Halo driving categories Sainsbury’s Sainsbury’s • Focus on core own brand products, especially Market 10.0% 6.2% Meat, Fish & Poultry and Produce
Slide 28: Value: Sainsbury's Quality, Aldi Price Match
Financials Strategic highlights Value: Sainsbury’s Quality, Aldi Price Match Sainsbury’s Quality, Aldi Price Match (SQAPM) • c.300 SKUs Proportion of SQAPM volumes in Fresh • Focus on Low Prices and EPP • Focus on Fresh categories • Continuing Halo benefits 87% volume in • Positive volume differenti
Slide 29: Value: continued improvement on price position vs competitors
Financials Strategic highlights Value: continued improvement on price position vs competitors Price index vs Aldi Price index vs Tesco Total Total H1 22 vs H1 22 vs FY 21 1,3 FY 211,4 improved improved 400bps 10bps Centre of plate 2 Centre of plate 2 H1 22 vs H1 22 vs FY 21 1,3 FY 211,4 improved imp
Slide 30: Value: price investment driving halo volume uplift
Financials Strategic highlights Value: price investment driving “halo” volume uplift Halo benefit from price investment Growth in secondary customers ahead of the Big 41 Net P&L position Net price Halo Gross price Elasticity investment benefit Sainsbury’s Morrisons Asda Tesco investment benefit 1 So
Slide 31: Food Innovation: transforming new product development
Financials Strategic highlights Food Innovation: transforming new product development On track to triple innovation Autumn Editions 1,800 600 Target FY FY 19/20 21/22 Delivering across Food First Basket size Trade-up Halo spend 31 J Sainsbury plc Interim Results 2021/22
Slide 32: Food Innovation: Helping Everyone Eat Better
Financials Strategic highlights Food Innovation: Helping Everyone Eat Better Eat Better Better Value Accessible innovation Plan for Better 32 J Sainsbury plc Interim Results 2021/22
Slide 33: Online demand still very strong despite normalisation
Financials Strategic highlights Online demand still very strong despite normalisation Online weekly orders1 Same day delivery and C&C relaunched 900,000 Online weekly 30 orders Number of stores 800,000 25 700,000 20 233 600,000 Supermarket 15 500,000 transactions 174 10 400,000 300,000 5 0 200,000 0
Slide 34: Unique breadth of online grocery options for customers
Financials Strategic highlights Unique breadth of online grocery options for customers GOL GOL Chop Chop Deliveroo / Delivery Click & Collect Uber Eats Stores 254 325 48 390 Cities & towns 98% UK population 98% UK population 22 95 Average basket size £95-£100 £90-£95 £30-£35 £20-£25 Average weekly o
Slide 35: Biggest online market share winner: now market #2
Financials Strategic highlights Biggest online market share winner: now market #2 Strong online market share gains1 Share of top 5 competitors 5.6% 6.1% 9.5% 10.3% Morrisons Online 17.5% 18.8% 14.6% 14.5% Ocado 23.9% 20.5% 19.9% 19.0% Asda Online 15.5% 18.1% 20.7% 21.3% Sainsbury’s Online 37.5% 36.5
Slide 36: Strong online productivity
Financials Strategic highlights Strong online productivity Profit contribution margin Basket up size 4% 2 times Yo2Y H1 H1 19/20 21/22 H1 H1 19/20 21/22 Items picked up per hour 9% (IPH) Yo2Y H1 H1 Online profit contribution 19/20 21/22 4 times Drops per hour up 10% H1 Yo2Y H1 H1 H1 19/20 21/22 19/2
Slide 37: Plan for Better: bold commitments to drive positive change
Financials Strategic highlights Plan for Better: bold commitments to drive positive change Healthy & sustainable diets At least 83% healthy and better for you sales tonnage by 2025 Reduction in Reduction in Reduction in Sustainable sourcing Carbon emissions Food waste plastic packaging & biodiversit
Slide 38: Customer and profit focus
Financials Strategic highlights • Customer and profit focus • Supporting the core food business Focus on food, coalition Reduce cost to serve Simplify and and data monetisation Improve profit delivery strengthen 38 J Sainsbury plc Interim Results 2021/22
Slide 39: Nectar: growing digital customer base, advancing personalisation
Financials Strategic highlights Nectar: growing digital customer base, advancing personalisation Digital Nectar Nectar Prices 10m+ ambition 1. Customer potential 8.2m sales value score digital collectors 2. Price sensitivity score 3. Product offer types 4. Personalised pricing Oct Sep 2019 2021 39 J
Slide 40: Nectar360: key B2B revenue streams
Financials Strategic highlights Nectar360: key B2B revenue streams Loyalty Shopper Marketing Data and Insights Digital Media Retained long-term Advertising Bespoke analytics and Advertising onsite Nectar partnerships in and around store insight products (sainsburys.co.uk & argos.co.uk) and offsite (
Slide 41: Nectar Profit Growth: driven by Digital Media
Financials Strategic highlights Nectar Profit Growth: driven by Digital Media Nectar360 Billings Forecast Incremental Nectar360 Group Profit Contribution Billings growth 25%+ +£60-70m 30% Digital Media £345m additional profit by 25/26 21% 10% Data & Insights 8% Shopper 12% 10% Marketing 59% 50% Loya
Slide 42: Argos: digital transformation, category breakdowns
Financials Strategic highlights Argos: digital transformation, category breakdowns Flexible fulfilment options Largest categories growing on a 2-year basis Category size 100% 37% Home Consumer Electronics 21% delivery 80% Home and Furniture 22% 60% Click and 49% Collect Garden, Seasonal, Sport 14% (
Slide 43: Argos transformation: lower cost to serve by £105m
Financials Strategic highlights Argos transformation: lower cost to serve by £105m Standalone Argos stores Collection Local stores in Sainsbury’s points fulfilment centres 570 450 430 to 401 c.400 to 5001 336 4601 c.340 c.325 306 306 32 281 1011 FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY 19/20
Slide 44: Habitat brand relaunch: driving home and furniture performance
Financials Strategic highlights Habitat brand relaunch: driving home and furniture performance • Lead Home and Furniture Increase in Habitat Mix brand • Improved market position for home and furniture Home & • New brand commitment: Branded “make your home a happy habitat” Habitat • Introduction of H
Slide 45: Clothing: a stronger, more profitable business
Financials Strategic highlights Clothing: a stronger, more profitable business Market share Online sales Growing full price sales participation +70% Yo2Y 13% 6th 89% 81 % Largest 64 % UK retailer1 8% H1 H1 H1 H1 H1 19/20 21/22 19/20 20/21 21/22 Online participation Full price sales participation 1 K
Slide 46: Financial Services: strategy focused on Sainsbury's customers
Financials Strategic highlights Financial Services: strategy focused on Sainsbury’s customers 1 2 3 4 5 6 Capital self Improve Financial Transform the Reduce risk Focus on sufficiency returns services cash cost base profile to group Sainsbury’s generative customer base Financial Services 96% of Stor
Slide 47: Structural change to accelerate cost reduction
Financials Strategic highlights 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
Slide 48: Strategic cost reduction plan on track
Financials Strategic highlights Strategic cost reduction plan on track Reduce retail operating costs/ sales % by 200 bps+ Accelerated cost saving plans £m • Driving momentum in cost programmes • Addressing inflationary cost pressures • Structural transformation: c. 75% structural cost savings • Adap
Slide 49: Accelerating cost savings
Financials Strategic highlights Accelerating cost savings Key cost savings programmes £m Centrals & Organisation Technology improvement Integrated Logistics & Supply Chain Property rationalisation Marketing efficiencies Operating model: - Argos transformation - Groceries Online - Counters - Waste an
Slide 50: Key cost saving programmes
Financials Strategic highlights Key cost saving programmes £105m £70m-100m £60m Argos store transformation and Centrals and Organisation Counters fulfilment model support costs • Store rationalisation • Office space reduction • Lower cost to serve • Local Fulfilment Centre programme: • New ways of w
Slide 51: Moving at pace to change the business
Financials Strategic highlights Moving at pace to change the business Food back at the heart of Sainsbury’s Portfolio brands supporting food, delivering for customers and shareholders in their own right Structurally lower cost to sales ratio (by at least 200bps) Pursue partnerships or outsource wher
Slide 52: Delivering for shareholders
Financials Strategic highlights Delivering for shareholders • Cost transformation: 200bp+ reduction in cost to sales Profit inflection • Working with suppliers to unlock value • Funding stronger food performance • 2021/22 UPBT of at least £660m 1 Profit • Reducing cost to serve and improving working
Slide 53: We are delivering on our priorities
Financials Strategic highlights We are delivering on our priorities • 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 com
Slide 54: Q&A
Q&A