J Sainsbury plc

Chief Financial Officer. I will now hand you over to Chief Executive Simon Roberts for the presentation.

Thank you.

Well, good morning, everybody, and thank you for joining Blanard and I to talk about our quarter one trading covering the period, the 16 week period to June the 24th. I'm going to talk about our trading performance in the quarter. And then, of course, we'll be happy to take everyone's questions. The webcast I'm going to show the slides on now over the coming minutes is also available on our website. OK, so first, a reminder, and you know these well, of our key priorities that we set out back in November 2020. Today, we're a fundamentally stronger business than we were two and a half years ago. our priorities have driven that reset with our relentless focus on food first improving our food business supported by our brands that deliver delivering a stronger general merchandise business and as a result of our focus on safe to invest we're delivering the structural cost reduction that we committed to meanwhile in connected to customers nectar is becoming an ever more powerful driver of the way we talk to and connect with our customers and a future profit driver too. In this quarter, we have successfully launched Nectar Prices. We're also really encouraged as a team by the progress we're making on Plan for Better. And we've now fully integrated sustainability into the core of the business and into our decision making. Now, in April, we talked about the progress we've made and our determination to build on that stronger position. We're continuing to make bold choices to save costs and to invest where it matters most to our customers and to our colleagues too. And it's as important as ever that we maintain our improved value position. And we're determined to keep prices low on the products that customers buy most often. We're also committed to pass on input price savings to customers as soon as we can. And the Nielsen data suggests that we're leading the industry in doing this. We're also continuing to support our colleagues through the cost of living crisis. We've extended free food available in our stores, distribution centres and contact centres indefinitely. And we're also offering additional colleague discounts over this summer. Now, we know that when we prioritise investing in our colleagues and our team and our people, we see the benefit in colleague engagement and that comes through into our customer service. Now, the innovation muscle that we've developed has been a real strength for us this quarter, and customers are recognising us more and more for our choice and for our quality too. And in the quarter where customers have had an unusually high number of big national occasions to celebrate, they look to us as the clear choice to help them do that. Now, I said in April that one of the factors behind the profit guidance range that we provided for the year ahead was that we wanted to retain the flexibility to make the right choices for the business over the course of the year for all of our stakeholders. Now, there's still a lot of uncertainty out there for customers and a lot of the year still to trade. So whilst we're pleased with the momentum we've generated in quarter one, particularly in grocery, and we're excited about the plan for the rest of this year, we're retaining that guidance range at this stage. So let's turn now to the quarter one numbers. Grocery sales, as you can see, increased by 11% over the quarter, an acceleration of about four percentage points on our quarter four. Now, inflation was less than 1% higher quarter on quarter, so the majority of the improvement was driven by a return to volume growth. Some of this is carrying over momentum from last year, but we were also helped by the particularly strong performance through the bank holidays and events, and of course, the good weather that came towards the end of the quarter. Now, Argus continued to gain market share, growing ahead of the market with strong consumer electronic sales, offsetting weaker seasonal sales earlier in the period when the early spring summer weather was clearly cooler. And it's worth noting that the 5.1% growth quoted here would have been more than 6%, excluding the impact of the closure of Argus in the Republic of Ireland. We have now fully closed the business. So the impact of this over the next three quarters will be closer to two percentage points. Clothing sales were also impacted by the cooler spring weather. Two customers are a bit more seasonally driven and bite aware. And so we saw a big contrast between weaker sales earlier in the quarter and then stronger sales growth as the weather improved. In what was a highly promotional market, full price sales participation increased over the quarter year on year. Fuel sales were down 21 percent, reflecting both lower input prices and volume declines. Now, in grocery, we've outperformed the market this quarter with strong volume momentum, reflecting the continued benefits from our value proposition, the launch of nectar prices in April and a strong performance relative to the market across all the key events in the quarter. And we're really encouraged that we've made gains from both primary and secondary customers through this period. For over two years now, we've consistently inflated month in, month out behind key competitors. And customers are increasingly relying on us for consistent value, particularly across the products that they buy most often. Now, we've committed to customers that we will pass on input price savings and the basket of our top 100 selling products is cheaper now than it was in March. And that's against the market where prices have gone up. The box on the right hand side of this chart shows the year on year improvement in our price position versus key competitors across all the products that we can match. Now, of course, value is not just about lower prices, and we're delivering for customers across the full breadth of prices and promotions, increasingly through Nectar prices and personalized offers through your Nectar prices. And as you know, we launched Nectar prices in April, and we've seen a fantastic customer response, with more than a million new customers signing up to Digital Nectar in the quarter. We're rolling out Nectar Prices to more and more products, and it's now available on more than 3,000 products, including own brands, fresh products, and fruit and vegetables too. And customers have already saved over £90 million through shopping Nectar Prices since we launched in April. Customers are also continuing to manage their household budgets by switching into our own brand products. And our new Stamford Street range brings a number of entry price point products together under one brand and expands the range to making it easier for customers to find great value when they shop with us with around 200 everyday staples at low prices. Now, more than 40 percent of these products feature in the price match, which is now at its highest level to covering around 370 products in total. Now, the first quarter has given customers lots of opportunities to get together with friends and family across many big events. And we've continued to show the best of Sainsbury's here, outperforming the market by at least 3% across all the key seasonal events in quarter one, from Mother's Day through Easter to the late May bank holiday. And of course, the coronation building on our performance last year. We launched over 300 new products in the quarter with a big focus on fresh, taste the difference lines. And that drove fresh, taste the difference sales growth of 12% in the quarter. And as customers look to enjoy picnics and barbecues over the summer with hopefully more good weather, we've almost tripled our summer innovation in taste the difference compared to 2021. We've consistently invested in our colleagues and as a result, we're seeing strong colleague engagement scores. Importantly, this is also feeding through into further improvements, as you can see, in our customer service. Now, the team and I are really proud that our team continues to deliver leading customer satisfaction scores in supermarkets ahead of our full choice competitors. And we're seeing some recovery in customer satisfaction, too, as the impact of higher prices start to unwind. Since launching Nectar Prices, we've seen a step up in customers rating of our great promotional offers. And we continue to lead on key areas that really matter to customers, such as speed of checkout and availability of our colleagues. So let's now turn to general merchandise and the performance in the quarter. The chart on the left here shows the detail behind the Argus sales growth. We've seen really strong growth across the lower margin key electronics categories, still benefiting from stronger availability year on year in mobiles, tablets and gaming consoles and ongoing demand for energy saving products. The chart on the right shows that this is where we've made the biggest share gains. This has been offset by weaker sales across the higher margin seasonal categories, with a later start to summer having had an impact, particularly against very good early summer weather through the same period last year. And home and furniture sales are down year on year, but marginally ahead of a weak market. overall we're pleased with the performance given the market share gains across all categories but we will face tougher comps through the remainder of the year as we annualize the start of the improvement in availability last year and of course continue to trade against last year's very hot summer weather so in wrapping up i would like to go back to the key priorities which are continuing to drive our clear focus and the momentum we're seeing across the business Looking ahead to the rest of the year and how that might play out, there's still a lot of uncertainty, but we are encouraged by our performance in the first quarter and we remain very much on track with the guidance we set out in April. So thank you for listening to that. Brandon and I are now very happy to take your questions.