J Sainsbury plc

Hello and welcome to the Sainsbury's 2024-25 Q1 Trading Statement Analyst Q&A call. On the call this morning is Simon Roberts, Chief Executive and Blonard Bergin, Chief Financial Officer. I will now hand you over to Simon Roberts for opening remarks.

Thank you. Well, good morning, everybody. And thanks for joining Blonard and I to cover our first quarter trading statement covering the 16 weeks up until the 22nd of June. I'm going to highlight some key points about our trading performance in the quarter. And then of course, Brandon and I will be really happy to take all your questions. So, as you know, this is the first quarter of our next level Sainsbury's strategy that we shared with you back in February, and we've set ourselves up really well to build on the progress that we've made over the last three years. I'm pleased with this first quarter against a particularly strong period last year, which benefited from peak inflation, from the launch of Nectar Prices and a good early start to the summer. Against this, our strong momentum in groceries continued with a second year of volume growth. We've now made gains from competitors every month for 15 months. And more specifically in this quarter, we've gained more market share than anyone else in the period with strong switching gains from across the whole of the market. And it's worth reminding you too that these gains haven't yet seen any of the real benefit from the work we'll be doing to allocate more space to our highest opportunity stores in food. This programme will begin to deliver significant benefits through next financial year. So we are continuing to see customers consolidate their grocery spending. As people return to normal patterns of working in offices, they're shopping around less. Customers have always recognised Sainsbury's for great quality and service, and because they're now trusting us more and more on value, we're gaining more share than anyone else when customers are looking for a one-stop shop to meet all of their needs. Our consistent focus on great quality, value and service has never been more important, and we've been making gains at both ends of the market. We've improved our value perception ahead of the market while at the same time continuing to outperform all competitors in premium own label volume growth as customers choose taste the difference when they want to treat themselves, friends and family at home. We've launched 400 new products this quarter with a summer additions range that we're particularly excited about, especially now that we're starting to see some more sunshine. Taste the Difference sales grew 14% in the quarter, and it remains our fastest growing own brand. During the period, we annualized the launch of Nectar Prices that went live in April, 2023, and was then rapidly rolled out across the summer to reach over 6,000 offers. We now have almost 18 million digital nectar collectors, and they're responding really positively to the great value and rewards they can access through the scheme. We're also partnering with an increasing number of the UK's biggest brands to run innovative promotional events, and that's creating loyalty and value for customers, as well as increasing value to us as Nectar gains more and more momentum. Suppliers are really supporting and partnering with us on these exciting initiatives, and at the same time, they're benefiting from our leading Nectar 360 capabilities in terms of the insights and the return on advertising spend they're now able to access. Meanwhile, in general merchandise, we have, as expected, faced a more challenging period, with tough weather comparatives particularly impacting the end of the quarter. Argos sales reflected the toughest comparatives we will face this year, with an unseasonal start to summer impacting house, garden, and outdoor furniture categories. You'll also remember that last year we had the benefit to our consumer electronics sales from gaming, as we had strong availability at the time of some new releases. Demand has been weaker this year in these categories, whilst we see customers continue to shop more cautiously across the general merchandise market generally. Now, against this backdrop, we continue to make good progress in transforming Argos in line with the plans we set out in February. We are enhancing our digital offer with continued personalization of customers' experience online and improved attachment capabilities, such that more than 90% of our products now have a suggested add-on. We're also further improving our ranges. And as we discussed earlier in the year, we're increasingly using stockless supplier direct fulfillment arrangements to enable our range expansion, particularly into popular premium brands. We are underway with our £200 million buyback programme and last month announced that we additionally expect to return at least £250 million to shareholders once the sale of Sainsbury's Bank's core banking business to NatWest has been completed and the future model for Argos Financial Services is in place. Returning to guidance, we've had a later than expected start to the summer, but it's early in the year and there are softer Argos comparatives to come. So as we set out in April, we continue to expect full year retail underlying operating profit of between 1010 million and 1060 million, which represents growth of between 5% and 10% versus last year. The business is in great shape, as you can see from the strong, continuing momentum of our grocery performance relative to the market. And we remain sharply focused across the whole business on delivering our next level commitments. So thank you for listening to that introduction. And Bernard and I will now very happily take all your questions. Thank you.

Welcome to the Q&A section of this call. If you wish to ask a question, please use the raise hand feature located at the bottom of your screen. If you have dialed in, press star nine to raise hand and star six to unmute. When called upon, please unmute yourself and begin with your question. Our first question is from Sreeta Mahamkali at UBS. Please unmute yourself and begin with your question.