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Sainbury's 'Confident' In Strategy As It Reports on Full-Year Results

Sainsbury's Argos Oldham-43. 725 x 500.jpg

Sainsbury's has reported preliminary results for the year ended 9th March 2019.

Highlights

  • 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

Strategic highlights

  • 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

Financial highlights

  • 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
<th colspan="4">Business Performance                            2018/19   2017/18    Variance          </th><th>Group sales (inc VAT)</th><th>Group like-for-like sales (inc VAT, ex fuel)</th><th>Underlying profit before tax</th><th>Underlying basic earnings per share</th><th>Proposed final dividend</th><th>Proposed full year dividend</th><th>Net debt (including perpetual securities)</th><th>Return on capital employed</th>
£32,412m£31,735m2.1%
  (0.2)%
£635m£589m7.8%
22.0p20.4p7.8%
7.9p7.1p11.3%
11.0p10.2p7.8%
£1,636m£1,858m£222m
8.5%8.4%-

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.”

Source : Sainsbury's

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01 May 2019

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