Sainsbury’s results deliver against plan to put food back at its heart

Sainsbury’s has posted its Preliminary Results for the 52 weeks ended 6 March 2021, showing a robust performance.

Financial highlights
• Strong operating performance, with grocery sales up 7.8%, general merchandise sales up 8.3% and digital sales up 102%.
• Underlying profit before tax down 39% to £356m, with benefits from strong sales growth (excluding fuel) more than offset by £485m of direct COVID-19 costs. Statutory loss before tax of £261m predominantly reflects one-off costs and impairments associated with strategic changes announced in November.
• Continue to expect underlying profit before tax in the financial year to March 2022 to exceed March 2020 level (£586m); comfortable with consensus forecasts of around £620m.

Strategic highlights
The group made good early progress with the plan announced in November to put food back at the heart of Sainsbury’s. It is changing at pace, making bold decisions and investing in the areas that matter to customers, underpinned by an accelerated cost saving programme. Throughout the pandemic the group has remained focused on delivering against this plan and have built good momentum:

• Adapted at pace to COVID-19, prioritising customer and colleague safety, supporting communities and helping to feed the nation. Record customer satisfaction scores for friendliness and speed of checkout and rated best for customer safety throughout the pandemic.
• Improved the value of food ranges, lowering the prices of the products that matter most to customers and extending its Price Lock price commitment. Also launched Sainsbury’s Quality, Aldi Price Match and customers are responding by spending more with us, more often.
• Changing its ways of working and supplier relationships; will triple the levels of new product innovation to 1,900 products in the year ahead.
• Profitably grown Groceries Online from 8% of grocery sales in 2019/20 to 17% in 2020/21 and gained more market share than key competitors. Argos digital sales increased by 68 per cent, while also improving profitability.
• 7.4 million digital Nectar users, up from 4.5 million last year.

Simon Roberts, Chief Executive, said, “Above all else, I want to recognise the extraordinary job that my colleagues have done over the last 12 months. Their efforts have been nothing short of heroic as our entire team went above and beyond every day for our customers and communities. I am enormously grateful to the whole team for the way they have risen to the huge challenges this year and so selflessly looked after our customers and each other.

“We have put our colleagues and customers first every step of the way and, as a result, delivered industry-leading safety in our stores and record levels of customer satisfaction. In a year like no other, our industry has stepped up and worked tirelessly across food supply chains to feed the nation and we are very proud of the part Sainsbury’s has played. I also want to especially recognise our suppliers for all their support and partnership throughout this year in keeping goods flowing for our customers. They have done a fantastic job.

“This year’s financial results have been heavily influenced by the pandemic. Food and Argos sales are significantly higher, but the cost of keeping colleagues and customers safe during the pandemic has been high. Our full-year direct COVID-19 costs were £485 million, leading to a 39 per cent decrease in full-year underlying profit. We are pleased to propose a full-year dividend which is in line with last year, protecting shareholder income from the full impact of COVID-19 on profits.

“We have a bold three-year plan to put food back at the heart of Sainsbury’s and drive improved performance. We are transforming the way we work and I am encouraged by how all of our teams have responded and the early momentum and performance towards our plan.

“We have accelerated our digital transformation this year as we focus on serving customers however they want to shop with us. We have more than doubled our online grocery sales and have done this while improving profitability. Argos digital sales grew almost 70 per cent and our Argos transformation plan is on track to improve customer availability while reducing our costs.

“Like our customers, we are all looking forward to things feeling more normal over the coming months and getting excited about a summer of celebration, but we are also cautious about the economic outlook. While there is much that we cannot predict in the year ahead, we are absolutely focused on delivering for our customers and shareholders.”