J Sainsbury Plc Ord

all of our suppliers and all of our farmers, because our strong quarter three performance was the result of an outstanding team effort across our whole business. Probably the best Christmas execution I've seen us deliver in my nine years at Sainsbury's. So a big thank you to our entire team. We've described very clearly in our statement today how we set ourselves up strongly to deliver over the peak period. We upgraded our profit guidance in November, but we were super clear then, as we have been all year, that our priority was sustaining the strength of our competitive position and really standing out in an increasingly competitive market. So we invested in the areas that really matter most to customers, delivering great value, distinctive and differentiated quality and innovation, outstanding product availability, and market-leading customer service. And our customer satisfaction metrics across all of these areas tell us that customers really noticed, driving consistently strong trading momentum across the whole quarter against a softening grocery market. Performance was strong across all our grocery formats. Alongside our core supermarkets, we had record sales in our convenience stores and online sales growth of 14%, including a very strong increase in on-demand sales. But perhaps more than anything, we're particularly proud of the flawless execution of our plan this Christmas, particularly across fresh food. We delivered our best ever fresh food availability when it mattered most to customers in the key Christmas week and on the really big days right across the store network. And we did this together with a clean stock outturn post-peak with very limited waste and next to no markdown. This reflects the investments that we've made across our operations in recent years, as well as all of our colleagues and our suppliers planning and delivering this. And again, a big thank you to them all. Now, the strength of our trading performance has meant that we're able to reiterate our profit guidance today, despite a weaker general merchandise backdrop. And we're upgrading our free cash flow guidance, reflecting the strong working capital progress in particular. We continue to expect to return more than £800 million of cash to shareholders this financial year. Now, these two charts firstly show the strength of our grocery volume market share performance across this peak quarter, where we've now outperformed the market for six consecutive years. And secondly, the strengthening of our performance relative to the wider grocery market over the course of the year, with switching gains accelerating over the course of the year and now more than double the level in quarter three that they were in quarter one, with gains coming from across the breadth of our competitive base. Now, looking at sales growth across the business, grocery growth was broadly in line with the first half, with volume growth remaining at around 2% despite a softer market backdrop. Clothing sales were broadly in line with last year, gaining share in a weak, seasonally driven market. And general merchandise sales were down year on year, partly reflecting the reduced space allocation. Argos sales declined by 1%, but with volume growth offset by the impact of lower average selling prices across the market, reflecting subdued customer spending on bigger ticket items like furniture, heavy promotional activity, and a weak gaming market. Now, focusing back on the drivers of our strong grocery performance, the consistency of our value delivery is key here. Nectar prices are the price match, and for the first time this peak period, through personalised your Nectar prices being available to all our supermarket customers. More customers are shopping bigger baskets at Sainsbury's, and this really stands out in a market where volume growth has been under pressure. Sainsbury's has always had a reputation for quality fresh food, and our performance here has been outstanding, with fresh food sales growth of 8%. Strong availability has supported customers buying more fresh ingredients and proteins, with fruit and veg sales up 6%, meat, fish and poultry sales up 9%, and dairy sales up 10%. Perhaps the clearest indicator of customers choosing Sainsbury's for their big Christmas shop is our fantastic availability and the fact that we sold 20% more turkeys year on year and every single one of them was British. Taste the difference sets us apart from our competitors with our high premium label sales penetration reflecting our reputation for quality and innovation. From this strong base, we grew premium own label sales and market share faster than anyone in the market. Taste the difference, fresh food sales were up 15% year on year. Argos delivered volume growth in a subdued general merchandise market with weak consumer confidence, a high level of promotional activity and headwinds from online traffic trends. Volume growth was offset by a lower average selling price, reflecting promotional activity and the impact of weaker big ticket sales in categories such as furniture and lower gaming sales. Sales growth and market share was strong in homewares, electricals and toys, in our expanding ranges of supplier direct fulfilled items and through our app, but we are building higher customer loyalty and share of mind. Brand perceptions have improved on value, quality and overall satisfaction. And tight stock control ensured that we exited the quarter with a very clean stock position. We continue to expect Argos profits to be broadly in line with last year, but down year on year in the second half. Now, we've made reference to the balanced choices we're making across the business many times. We're investing in our customer proposition across value, quality, and service and bringing more great food to more customers in more locations and in delivering personalized value. And through our capital investment programs across technology, digitization, and automation, we're improving the customer proposition, we're improving the store execution and efficiency, and we're building a structural cost advantage over competitors who are not making these investments. These balanced choices help us deliver a consistently winning proposition for customers and sustain momentum that will deliver for all our stakeholders. We look forward to talking in more detail to you about these with our four-year results in April. So now let's open the call for Blandon and I to take all your questions. Thank you.

We will now go to Q&A. If you would like to ask a question, please use the raise hand feature at the bottom of your screen. Alternatively, if you have dialed in, please press star nine on your handset now. To keep things as fair as possible, please only ask one question per person. If we get additional time, please rejoin the queue by re-raising your hand or pressing star nine and we will try to get back to you. We will pause for a moment to allow questioners to enter the queue. The first question is from Freddie Wild at Jefferies. Please unmute yourself and begin with your question.

Good morning. Happy New Year to you guys, too. First of all, would you mind, I think there's a bit of confusion out there today, why we're seeing consensus move down on what is quite a strong like-for-like numbers. Could you help us understand a bit more about the moving parts of the P&L and about maybe grocery over-deliver, maybe there's a bit more pressure in general merchandise and Argos than you were expecting? And then the second question, if I may, is could you just give us your thoughts on the outlook for inflation and volume in grocery over the year ahead? And finally, I just want to check your comments. I guess it's a bit on from that second question. Your competitor yesterday called the consumer resilient. And I just wondered whether you would echo those remarks or how you would see the consumer. Thank you.

Thank you. OK, well, let's take those in turn. Look, I think on the first question, we were super clear when we set out our guidance in November that our priority, as we said at the start of the year, was to continue to sustain the strength of our competitive position. We said that in April. You'll remember we said that again in November. And we did that at a time when we strengthened our guidance. You'll remember that clearly. And we were confident that we could do that. Exactly that, and deliver profits of more than a billion. But we set that out, I think, very clearly in November. Now, to your question, trading since then has been very much in line with our expectations in grocery. So what we set out in November, the balanced choices that we talked about then, the things that we were clear would be a feature of our plan when we set our guidance. Really, the grocery business has played out exactly as we expected. And important to say that we absolutely stuck to the plan that we built through the course of last year. It was a bit softer in general merchandise. But the important thing to say here is we didn't compromise our grocery business to compensate for a weaker consumer sentiment in general merchandise. So that's how that's played out since then. And I think, look, where we are today with about seven weeks of the year to go so and there's still a plenty that could happen out there in that period of time but we've a very strong plan for this period and but with seven weeks to go as it currently stands we'd expect our profits to be more than a billion um but probably to be slightly lower than last year's outturn as we continue to drive through our plan do the right things for our customers manage manage balance choices for all of our um stakeholders and in the context of a you know a very tough backdrop which others have spoken about already this week for the industry with significantly unexpected costs, both from NI and regulatory costs, the subdued general merchandise market, we think that would be a very good outcome. So that's where we are on the full year, Freddie. On inflation and volume, look, I think as we come through the third quarter, actually, we've seen our volume performance, as you've heard this morning already, be very robust. And actually, when we look at our volume quarter one to quarter two, quarter two to quarter three, actually quarter two improved a bit on quarter one and quarter three improved a bit on quarter two. So our volume is very robust in the context of how we've delivered. Why is that? Because customers are really trusting and buying into our total quality value and service proposition. You know, and despite the fact that volumes for the industry got a bit softer towards Christmas, you know, we've seen the strength of our of our volume performance over the quarter endure. Look, I think it's very clear we're over the peak of inflation. Good news. Inflation coming down, you know, commodities, you know, more certain. You know, we're not expecting the costs, unexpected costs that we had in this financial year as we look ahead. So I think a more clear move towards inflation coming down. We're obviously very focused on ensuring that the strength of our volume performance continues. We've got clear plans. We'll continue to see through on that as we continue to build trust with customers on our offer. And we'll talk obviously more in April about our outlook for the new year based on where the market and inflation and the competitor set is at that point in time. Look, I really agree with the comments yesterday. Look, I think in grocery, the consumer, very resilient, but I think making very clear choices both to trade up and trade down in the basket. You know, we talked about this in November. That's why our value proposition is really working for us. Customers, real confidence. in the ability to trade up with Taste the Difference. You saw the strength of that 15% growth, fresh food sales at 8%, but also the strength of Audi price match, the biggest in the market and neck to prices. And really importantly, we'll just make the point here, your neck to prices is becoming a real game changer for us. And the size of the investment we now make in personalized value, which is a value that only we can see is very significant now in giving customers more confidence in the total value they can get when they shop at Sainsbury's. And so the consumer is resilient. They want to trade up. They want to treat themselves. They want to do that at great value. They want great quality. But they also want assurance on the items they buy most often every week that they can get great value. And that's exactly not just for this Christmas, but over the last five years, how we've built our value position.

That's fantastic. Thank you so much. Thank you.

The next question is from Sreedhar Mohamkali at UBS. Please unmute yourself and begin with your question.

Sreedhar, good morning.

Hi, good morning, Simon, good morning, Lynne and James and the team. I guess, sorry to not stick to the instructions for one question, probably a couple from me as well. You touched on nectar prices, Simon, just now. Can you actually more broadly talk about how your price position has evolved as you measure it versus the key competitors set through the period? Reflecting your comment on Nectar prices, how clearly are you able to measure it? Has it continued to improve in the period? That's the first question. Second question, I think you've already kiboshed the question a little bit, but I'll try and have a go again. I know it's a bit too early to talk about profit outlook for the year ahead. We've not even finished the year. But your plan is to deliver profit leverage over the period of the strategy. And does the volume growth you're building give you confidence to think you will deliver the profit leverage and profit growth for the year ahead? Please. Thank you. To the extent you can.

Thank you. Why don't I speak to Nectar Prices and maybe Blanhead, whilst we're not going to get into next year, maybe just a little bit about how we think about our next level plan and where we're up to. Thanks, Chris. I mean, just to double down on the point we just made, we came into this year very clear, I think, back in April that our number one priority was to sustain the strength of our competitive position. And you've seen in quarter one, quarter two and now in quarter three how that's exactly what we've done. You know, as competition in the market has become a bit more intense this year, we've made sure that we've positioned the Sainsbury's grocery business for customers in a way where more and more customers are getting confidence to do their big trolley shops with us. And exactly to your question, you know, Nectar is so fundamental in that. I mean, just to bring to life what it's meaning for customers. For the average Christmas shop this year, customers saved about £27 on their Christmas shop. And over the course of the year, customers are saving around four hundred and fifty pounds as a result of using nectar on their shopping. And we saw the highest participation of nectar prices over this Christmas that we've seen at any point in time. So the propensity of nectar to give customers real confidence and trust is building all the time. And, you know, at the same time, as I described earlier, we've added your net to prices now to become available for every supermarket shopper. And that really is giving customers across the things they buy frequently that confidence in that value. And so when we think about our position against the market to your question, as I said, Now, when we look at the volume across the quarters, the volume is around 2% for us. It was around 2% in quarter one. It got a smidgen better in quarter two, and it's got a smidgen better in quarter three. So our volume performance is very consistent. We always said, didn't we, that we would make sure that our value position was strong. And that's exactly what we've done. And I think, of course, pricing in this industry and in this market is incredibly dynamic week to week. Different retailers make different moves at different points of time as everyone's tried to navigate the impact of inflation, the impact of the costs coming through, but also present the best value they can to customers. And I think our team have done a really good job at managing that week to week, period to period balance to make sure the strength of the customer offer is where it needs to be. And also, you know, we manage these costs of inflation and the impact they have. And the overriding point I would make is, you know, our volume performance for the sixth consecutive Christmas, we're really delighted with. You know, and even as volume softened a bit in the market as we came into the kind of key Christmas weeks, you can see in our numbers today the strength of our volume performance. I come back to our core strategy. Food first, center of the plate, items that people buy week in, week out, confidence in the value, confidence in the quality, confidence in the service. And that's really what's played through in our performance, which is why both our price position and our overall proposition continues to get more traction with customers. And I think navigating this inflation environment will be one of the key defining points of this year, won't it? And what we've done is stick to exactly what we've said, which is sustaining the strength of our overall competitive position.

Great. Thanks, Simon. So let me take the profit leverage question. At the start of the year, market was very dynamic, a lot of headwinds, particularly with the cost inflation that we saw coming in. So we laid out quite clearly unlikely to deliver profit leverage this year. That still remains our position. We'll guide on next year when we get there. But what I would say is that we remain committed to our plan and committed to delivering profit leverage over the life of the plan. We've seen the volume growth. We're confident in what's coming through and the volume growth and the investments we're making are in the right place. We called up the cash guidance today to at least 550 million. So on track for that 1.6 billion over the life of the plan. Cost savings program you'll have seen in the R&S. We're on track and on target to deliver that 1 billion. So all that's been equal.

and you know we're absolutely committed to profit leverage over the life of the plan a very quick follow-up on the cash flow upgrade um can you expand on on that which aspects of working capital you're over delivering uh please

So there's a combination. And in a business like this, working capital is complex. It's like landing a jumbo jet on the head of a pin as you come into your end. We have been running a working capital program over the last three years. Last year, we focused on inventory. You'll have seen again this year the discipline that we had in inventory and the clean exit that we had on the back of Christmas. So inventory will continue to deliver a little bit this year. We've also been working on payment terms and what we want to do there. and they're starting to deliver and come through as well. So it's really just discipline and focus on the cash management across all areas of cash. So you've got that in all areas of the P&L as well. We look forensically at cash.

Thank you, Ruth. Thanks, Rita.

The next question is from Rob Joyce at BNP Paribas. Please unmute yourself and begin with your question.

Hello, Rob. Happy New Year.

Happy New Year.

Happy New Year to you both. Thanks. Thanks very much for taking back to you. Thanks for taking the questions. So first one, sorry, just in terms of relative pricing, do you think you've improved or is this as that got worse over the period? Just as quite a few questions in the market on that in terms of grocery. And then the second one would just be on Argos. My estimate's roughly gone from a 20 million tailwind to a 20 million headwind in the second half. So to get to that flat number you talk about. Is that about right? Have you exited the period with clean stock? And is there any help from this cold snap we've had in there?

Thank you. Well, thanks. OK, well, why don't I pick up the first point and then maybe Blanid on Argos. Look, I think, you know, as you've heard me say a number of times, Rob, we started the year really clear on our priority on the competitive position. And that position hasn't changed at any point through the year. You'll remember at the half, we talked about the fact that we'd inflated a bit behind the market in the first half. And we've come into the Christmas period with very strong momentum. That's what's given customers confidence to shop with us. I mentioned just before that our volume performance actually tipped up a little bit quarter three from quarter two, which I think just shows the confidence customers have in the offer. And then I think what shifts the balance as the year develops is the importance of this personalized value I've just been talking about. You know, you shouldn't underestimate how much of our value investment we're now putting into personalized value and giving customers value unique to them when they do their big shop. And so in the round, you can see in our volume how strong our big basket growth has been, customers putting more items in the basket this Christmas, buying into next to prices, the highest participation, and now your next prices. And so we're absolutely focused on balancing this inflation challenge to the course this year, high inflation in the market. How do we balance what we put through to the shelf whilst giving customers great value? And we think we've got the balance here. about as good as we could have done through this period and it's worked in terms of the christmas plan as we look into the new year um obviously our value position super important this time of year just having a you know really good look through the offer this week in stores and online you'll see the strength of our value position both in the biggest Saudi price match in the market and in next prices again. And look, I think the last thing I would say just on the theme is there's a lot of noise, isn't there, in the last few weeks to Christmas around prices. We stuck to a plan that we built through the course of the year. We didn't make any changes to that plan Now, I would say overall, an observation I would make is it was clear where others were adapting their plans based on some of the shifts that were happening. We didn't need to do that. We built a plan. We stuck to it. We executed it. And customers shot more with us this Christmas.

Yeah, so Argus, look, we're pleased with the volume growth. But as you can imagine, you know, average selling price, big ticket items, consumer confidence, a little bit under pressure as well. So we saw that coming through in the overall sales number. We guided to flat profit year on year in Argus. We're holding that guidance on that. So we are not chasing profit in Argus. We're really focused on the transformation, getting the foundations right. And you'll have seen some of the actions as we came through the quarter, you know, the visits to the app up 33%. And some of the supplier direct fulfilled products, over 20,000 new SKUs coming online on that. So we were also really pleased with the stock position. We exited clean, which was really important to us. And that shows the discipline that we're getting into the operation as well.

Rob, just on the last point, maybe if I could just add one other point we didn't make reference to, which is important to say that. I mean, you'll have seen, obviously, the link between the fact that we just had so little markdown and clearance this quarter as well. That was another important factor. And we just were so clean in how we managed stock levels, not just in the last few days, but actually all the way through. And that was obviously helpful, both in managing the operation of all of that. But we just didn't need to deal with a big clearance or waste issue in any way this year.

Thank you. Just very quickly on the inflation, you referenced the inflation environment a few times. How are we seeing that inflation environment evolving into 2026?

Yeah. Well, I think, you know, as has been pretty well documented by others this week, for sure, and by a number of you, I think it's clear we're past the inflation peak. And, you know, I think we'll obviously talk in April about where the context is there, where the competitive dynamics are at that point in time. But, you know, at this point in time, I would say that the two or three things that are clear to us is that, you know, we wouldn't clearly expect the unexpected cost impacts to come at us again next year that we've dealt with this year. So particularly, you know, the impacts obviously of EPR and NI, you know, we see obviously commodity costs becoming more stable and obviously there'll be wage inflation. But, you know, we plan for those things a long way out. And I just would make the point again that, you know, we have a very mature and developed safe to invest program now that's been building actually over five years. We come to the end of this financial, we'll have delivered £2 billion of structural cost savings in that period of time. And that programme continues to be very important in navigating operating cost inflation to next year. But I think the overall picture I would set this against is an environment that is much easier to predict than the one we had to navigate into this year. Thank you. Thanks.

next question is from elizabeth moore at city please unmute yourself and begin with your question elizabeth happy new year good morning happy new year thank you um so just one question um on the grocery growth you delivered another really strong quarter i was wondering if you'd be able to break down how much space contributed to that number uh so both in terms of the new store space contribution and then also the reallocation of space away from general merchandise within the store

Yeah, thanks, Elizabeth. I think that the kind of overriding point here, and we can definitely share some of the detail with you, perhaps after the call, is that our space programme we're really pleased with. There were two components to this. The first was reallocating space in some of our key supermarkets today where the food offer, we wanted to bring more assortment to those locations. And we've done a substantial number of stores. We'll do that in about 70 stores this year, actually. And those stores went through that change during the kind of summer period in the main. And so we're online over this Christmas and we could definitely see the benefits both in customer satisfaction, but also in volume of customers being able to buy a wider range of food products and come back to this big point. You want to come to Sainsbury's and get everything you want in stock. And more and more, we've been able to do that. The other part of our space programme, as you know, has been to begin our biggest new store opening programme in a decade, which is comprised of both supermarket and convenience locations. We're in the first phase of getting the new supermarket, particularly the home-based conversions, open. And again, the reaction we've had in those stores, we're really pleased with. The impact of new space actually builds into next year from this year, because obviously the stores we've landed this year have got a partial year effect where they'll come into a full year effect for next year. And so we'll show you as we kind of get into next year how we see the new space being an increasingly important part of our volume underpin. But I would just sort of characterize all that by saying, you know, the more for more plan is something we're really pleased with the progress. And actually, I think when we look back, the disruption took a bit longer than ideal to get through. But once we're through the disruption, we can see the benefits for customers and particularly actually this Christmas. In the stores that have been open for a year now, we saw a big tick up in their performance this Christmas as customers were just much more confident with the new store and the scale of the assortment that we've got. And then the other point to that, which I mentioned, obviously, we've taken some space in GM. of the GM kind of downside impacts there, if you could call it that. About 150 basis points linked to the space out, I think. But net-net, the overall position here is a more focused GM range in those stores, more assortment for customers, better overall outcome for the business. Thank you.

The next question is from Francois Degarde at Kepler Chevro. Please unmute yourself and begin with your question.

Francois, happy new year. Good morning. Yes, happy new year. Thank you. Did you observe... Yes, sorry. Do you believe the market Christmas trading trends are indicative of underlying market momentum on sell for extrapolating?

for the coming months on in line with that do you plan to significantly rebalance the mix between aldi price match nectar on the center of the plate prices thanks francois look i think if we you know if we take a step back on what we've observed not just over the christmas period but over the course of this year i think what's really clear to us and we do a lot of listening to customers as you would expect me to say is customers want confidence and trust But then whether they come and do their shopping in the second week of January or the week before Christmas or the middle of summer, that they can be really sure they're getting the value they expect on the products and items they buy, first of all, most frequently. And then secondly, where they want to trade up, they can get a trade up at really good quality and really good price. And thirdly, that when they come and shop with us, as we're talking today, they can get the full store or online experience, whether that be availability, whether that be service, whether that be loyalty, all the things that we've been working to build. What we saw this Christmas was a really strong performance in our grocery business for the sixth year running. We saw more customers shop their big trolley shop at Sainsbury's because of their confidence in all of the components of our offer. One of the things I think we would reflect on is the benefit of building understanding and loyalty of that offer. So the biggest Audi price match in the market, your next prices is really working for us. And I would say over the course of this year, there's been a lot of noise in the market this year, a lot of new pricing campaigns, a lot of new efforts by different retailers to bring new pricing and value platforms. But actually, it takes time for customers to work out what all that means. And one of the things we've really seen the benefit of is having a really clear, simple to understand value proposition that customers buy into week in, week out. That worked this Christmas. That's worked throughout this year. Progressively, that's been working over the last three years plus for us. And so our focus is giving customers value that they want. As we come into this year, the strength of our Nectar platform and the price match is going to make sure we've got continued really strong value. Of course, we'll continue to listen to customers all the time, but there's a big benefit here of customers knowing what they get from Sainsbury's, continuing to expect it, and continuing to deliver it.

Thank you, Ernest. So no focus on everyday price more than usual.

Well, I think, you know, in the Audi price match, there's a massive focus on everyday low price, clearly, because they're, you know, the biggest price match in the market. We're on the things people buy most often. You know, we've got all of those products that prices people expect alongside next prices. So, you know, we started everyday low price back in 2016 in reality, and it's been building since that period of time. And, you know, the strength of that offer week in, week out is really underpinning the strength of customers' value, confidence in Sainsbury's.

Thank you very much. Thanks.

Next question is from Benjamin at Deutsche Bank. Please unmute yourself and begin with your question.

Benjamin, good morning. Good morning. Happy New Year. I had a couple of questions. One a follow up around nectar prices and one around channels. I just wanted to ask what kind of impacts you've been seeing from those value investments into your nectar prices over Q3. And I guess to ask the last question in a different way, would you expect the mix of value investments going into your nectar prices to remain broadly unchanged as we head into 2026? And then on channels, you've called out the record performance inconvenience. Are you able to comment on how that roughly 2% volume growth was broken down by channel.

Thanks, Benjamin. OK, so don't want to repeat myself too much on next prices. What new can I add for your question? Look, I mean, I think the key point here is I've mentioned already we had our highest ever participation in Nectar over this Christmas. And actually I would just double down on the point that when we look at the number of SKUs now that are linked to next prices, we're north of 10,000 SKUs consistently, which is a third of our assortment is now linked to next prices. Hence the reason why customers are getting more and more confident to rely and trust on next prices. And just when we look to your question, actually in the context of Nectar on participation, You know, we see, you know, both in online and in our supermarkets, you know, some of the highest participation we've ever seen. In fact, online, there isn't much more we can do. Everyone shopping online pretty much is using Nectar now for obvious reasons, given the benefits it brings to a long list grocery shop. In terms of the kind of where do we go next on this? Obviously, your next price, as I've said this morning, that represents now a significant proportion of our total investment in value. So it's at least 25 percent of our total value investment is now going into personalized value. Customers really like that because they see us serve up every week on their Nectar app products that are unique to them. And in fact, one of the things you might see in our comms this week is Mark Givens just done a kind of great kind of run through how Nectar prices are working for customers, which you might well see on some of the social media channels the next few days, which really unpacks why for customers, It works so well for them. Next price is in store. And then those personalized value, which, as I say, now represents a much bigger part of the value investment that we've done before. But obviously, we balance the overall value investment that we replace. We started this year with a really clear priority to sustain our competitive position. That's what we've done. Nectar's really underpinned that. And on your question on channels, we're absolutely delighted with our convenience performance this Christmas. The team did an amazing job here because we identified all sorts of things in the convenience mission that we could really tune up. And, you know, I think what we're seeing is it was a record for convenience and actually particularly powered by fresh food, to your question. You know, we've done things to make sure that we've got our assortment right and fresh in place. convenience you know of course we'd always want to add more fresh space into those stores as customers more of those products but that's been a really strong part of the convenience performance and with a record new year's eve um you know we really stepped on our ability to satisfy customer needs in those last few hours of 2025 um and so you know across all the channels supermarkets convenience and online and i mentioned earlier 14 growth in grocery online we really invested in our grocery online proposition for this christmas we saw the biggest step up in customer satisfaction we've seen actually. And that was a function of much more slot availability, really good product availability. We saw the best ever product availability online this Christmas, and we really invested to achieve that. And I mentioned earlier, and it's in the statement too, on-demand was also a really big part of our overall online performance. And we're now the biggest partner in the UK working with Deliveroo and Uber Eats on our on-demand platform.

Great. Thanks very much.

The next question is from Matthew Clements at Barclays. Please unmute yourself and begin with your question.

Morning, Matthew. Happy New Year. Morning. Thanks both for taking the time. A couple of questions that's right. One, really strong growth again in Taste the Difference. I just wonder if you could talk us through the outlook for the premium own label into next year. Do you expect the structural drivers to remain in place, or could brand make a bounce back if suppliers are investing in price there? The second question on grocery would be around, sorry to bring back to your pricing strategy again, but just thinking more broadly about this kind of investment in personalized pricing. So your next price is clearly a very efficient way of giving customers very attractive value, but how easy is it to communicate that value on kind of a broader kind of almost national scale when at least one of your competitors is being very noisy around and very basic edlp pricing you know shelf edge beyond loyalty prices for example how easy is it to communicate that value um and then the third and final question on argos um so you're in volume growth um you just i think you said earlier You didn't have to run a big sale. Seems like in the second half, you might get some benefit from EPR as well. I'm just thinking, so in that context, the profit decline is maybe a bit surprising to us, probably not to you, but for next year, what levers do you have in your control to drive profit growth at Argos beyond market?

Okay, so thanks, Matthew. Shall I maybe pick up on TTD and the kind of pricing communication point, and then maybe we can just talk about how we think about Argos H1, H2 and into this year. Look, I think, you know, when we sat out our food first plan five years ago now, you know, I remember really clearly we talked about really driving innovation and product development in a way that we hadn't done for a period of time. This has been a hallmark of the Sainsbury's brand for decades, but we had lost our way a bit back then in making innovation a real standout for us. And so we started in 2020, actually, to really focus on this principle of quality at Sainsbury's. Our challenge was always if we could fix customer protections on value, then our quality credentials would really stand much stronger actually than anyone else again. And that's exactly what we've done. We built a very strong team, fantastic team, who are developing new products all the time and taste the difference. And for this Christmas, we had our best ever innovation plan, 260 new products. And they really were a big hit with customers. Now that has also clearly come alongside this big shift in the consumer to want to be able to buy restaurant quality meals to eat at home. And we've now a taste of difference brand that will go through two billion pounds of sales this year. We've actually already just about achieved that number seven or eight weeks out before the end of the year. You saw the size of the growth. We've delivered 15 percent in fresh food, in fact, overall. So it's a really, really key part of what we do. And, you know, I think more and more, particularly with the launch of things like Taste the Difference Discovery that we rolled out before Christmas, that was an absolute hit with customers. And I have to say, you know, customers have really bought into that kind of premium level of Taste the Difference that we launched, particularly in areas like MFP, in meal solutions, in cheese, in wine. And if you didn't have a chance to try any of those products over Christmas, then they're still available, many of them. um we've really elevated the premium nature there and customers are really buying into it so we think it plays into the uniqueness of the sainsbury's brand and we think it plays into the structural change in the market that we see continuing so lots more opportunities to accelerate in ttd um and we're really pleased obviously that with the market outperformance that we've achieved On your question about communicating to customers on value, look, I think it's always a combination of all these things, isn't it? Customers want to go to the shelf on the products they buy week in, week out and be sure they're getting the value they expect. And that's where the price match is really important. That's where neck to prices is really important. So we should never underestimate. It's always been true at the shelf edge. The job of price communication is critically important. But there's also a danger when, you know, pricing and... Competitive pressures get more intense. That becomes very noisy. You know, and I think the danger almost is filling up stores with lots of cardboard and messaging doesn't necessarily mean customers understand the pricing position. So we take a very balanced approach on this and making sure customers can see price at the shelf edge. But then to your question, using the Nectar app to reach more and more customers digitally. And that's where customers see the benefit of your next prices. And the fact we've added that now for all of our supermarket customers, as well as grocery online and smart shop, has been a real game changer for us this year. So you go into the app every week. The offers land the day before you normally do your biggest shop, and you see the offers that are unique to you. Love it.

So on August, look, H1, we had some good weather. That gave us a little bit of a tailwind in H1. H2, some headwind, consumer sentiment. I've talked about that volume up, but the average selling price down as consumer held back and that big ticket spending. As we head into next year, look, we are very focused on the August transformation. We're getting some of those building blocks in place. You'll have seen I talked about the app usage up 33%. We've also got the supplier direct fulfilled products. That's 20,000 new SKUs that are live on the system today. So broadening that range for our customers as well, which is really important. As we sort of head into kind of the next few weeks and into next year, the cost saving program is starting to get a little bit of momentum. into Argus and they're on track to deliver what they need to deliver. So pleased with that performance there. And you'll see the new financial services products coming online. They'll be live for the new financial year as well. So then you can start to see the components and the blocks coming together in Argus for next year.

Thank you. Thanks for the question.

The next question is from Manjari Dahar at RBC. Please unmute yourself and begin with your question.

Hello, Manjari. Happy New Year.

Happy New Year.

Happy New Year. Morning, Simon. Morning, Barnard. I just had two questions, if I may. The first question was a bit of a follow-on on Taste the Difference. I know we've been seeing very good premium segment growth in the market over recent periods. I was just wondering how you see the competitive backdrop in premium foods specifically, and sort of anything that your competitors are doing that you feel that you need to respond to. And then my second question was on Argos, I guess, given the sort of softer performance across peak, has that changed the way that you guys are thinking about the forward buy for Argos into 2026? Thank you.

Thanks, Manjari. OK, well, look, I'm definitely conscious. We've talked a fair bit on T2D. Look, I think, you know, no surprise that everyone's looking at their innovation and quality because it's where the customer is. Customers want to trade down in the basket and trade up in the basket. And so, you know, making sure, you know, if you're a grocery retailer in the UK, you've got the right range to meet that demand is obviously a really key strategic focus, I think, for many brands. I think for Sainsbury's, what really stands out here is this has been at the absolute cornerstone of what Sainsbury's has stood for for decades, actually. Quality, innovation, being at the heart of how consumers in the UK think about what they want to eat and enjoy with family at home has always been something that we've taken as a very sort of core of our brand. So what we've done is really amplify that, you know, that that deep connection. of focus for what sainsbury's has always been about and what we've been able to do is really capitalize on this move towards customers wanting to treat themselves at home with premium food but also really double down on the strength of our brilliant team actually at discovering and finding products from around the world that customers want to be able to buy in their local Sainsbury's. And that's what's enabled us year on year on year on year now, because we've just delivered 15% growth in this period. But that's on top of similar growth last year and the year before and the year before and the year before that. And so we intend to be very focused on continuing to accelerate this focus for us. You know, there's always things we can do better. There's always products we can find. In fact, I was just with James this morning, who's our director of product development, and he was talking about some of the big ideas the team already working on for next year. And I'm pretty sure there's going to be some very special things coming through. Actually, one of the big highlights away from Christmas for this year is we launched in the summer an absolutely groundbreaking range of products on Summer Deli. the customers could buy three of those for £8. And that really, really delivered the customers great quality. We've just got a small alarm going off here, which will take 30 seconds. OK, Majoris, that's on TTD. Look, on Argos, I think we were happy with the volume, right? It was a tough market, but we actually grew volumes year on year, which we were pleased with. And, you know, as a result of that, we were able to...

Let that finish for a second.

Apologies for that, Manjari. Okay, hopefully that's the test nearly finished. So, yeah, we're pleased with volumes over the period in Argos, particularly given the softness in the market. And look, as Brunette said just now, we're very focused on our More Argos, More Often plan, 20,000 more products and supplier direct fulfilments, 30% increase in customers using the Argos app. All of those things are going to be really important as we keep driving through our More Argos, More Often plan.

That's great. Thank you.

Thank you. The fire alarm is complete, hopefully.

Attention, please. Attention, please. The fire alarm test is now complete. Please respond to all future fire alarms.

Great. OK, next question.

The next question is from Xavier Lamene from Bank of America. Please unmute yourself and begin with your question.

Xavier, good morning. Thank you for taking my question. And good morning, and I can hear you too. Two questions, if I may, brief. First one is just on the competitive landscape. So do you have any expectation for 2026? You know, it's not like, as you mentioned, you know, a lot of noises, but do you have any expectation for potentially the market to remain rational? become potentially a bit more competitive so any thought on that would be much appreciated the second one can you potentially uh comment a bit the mix of products you've got in food branded goods private labels uh whether you've seen any change within private labels going towards you know the everyday low price products or the value one or more finals just to get a sense of the mix here

Great, thank you. Look, I think the most important point, maybe just to double down on here, is that we've definitely seen an elevation of the competitive intensity over the course of this year. That's no surprise given the events that started the year. We were... very clear back in April. And one of the things that I think our team did a brilliant job on is being very clear from the outset that we built a plan for this year that sustained the strength of our competitive position. And we've faultlessly executed that every period since. We've been very clear what we set out to do and we've delivered it period by period. And you can see in our results this Christmas how that's worked for us. One of the things that I'd say in businesses like this, sometimes it's tempting to adapt your offer to respond to what others are doing. And we definitely saw others do that this Christmas. We didn't do that. We built a plan and we stuck to it. And because of that, we delivered it very consistently. I would say overall that the market continues to behave very rationally. There's always quite a bit of noise in the few weeks to Christmas, various stunts here and there to try and win that bit of extra share. But when you look more broadly, I would say The market continues to be rational. Of course, it does, because there's been lots of inflationary pressures to deal with this year. You know, whilst inflation is going to come down a bit, you know, there's still, you know, substantial operating cost pressures to always navigate. And so I would expect that environment to continue. I think the key point to make here is that we've spent five years building our infrastructure. proposition in food as we put food back at the heart of Sainsbury's. And, you know, we're not going to concede on any of that. We've built really strong momentum over that five-year period. And because we've done that, we've also been able to make investments now in the long term. So the strength of our value, the strength of our quality, the strength of our service, but also, you know, we're investing now through our next level plan in technology and automation and personalization and all the strategic platforms that are critical to So we're in this industry over the long term, and we're doing that at a time when some of our competitors aren't able to make those investments. And so the strength of sticking to our plan, investing in new capabilities, doing the right things for customers every day, that's underpinned by how we continue to approach our position in this market. In terms of the kind of mixed question that you asked, I've said a number of times today and also in November, we saw customers, you might remember a slide from our interim presentation where we could see that customers were both trading down and trading up in the basket. That's going to continue because customers are still navigating in lots of cases, the challenges of the cost of living. Inflation is coming down a bit, but it's not going to come down dramatically. It's going to take time to find solutions. kind of its new base. And so the strength of our price match and the strength of our taste, the difference trade up, as we said today, become really important. They'll continue to be at the forefront of our plans as we look forward. But I think, you know, what we're looking at here is Sainsbury's delivering again a Christmas with a very strong set of value credentials that customers have trusted. and nectar being and your next price is being a key part of that availability i would just you know just double down on this point we've never delivered as strong availability as we did this christmas and on the big days when people want to get everything at once nothing's much more hassle than having to go to different stores to get different parts of your christmas shop our team really delivered on availability And thirdly, as I've said, our service metrics are really strong as well. So value comprises all those things, doesn't it? And we'll take all of that into this year and make sure we continue to deliver that consistency week in, week out. Thank you.

Next question is from Francisco Alsace from JP Morgan. Please unmute yourself and begin with your question.

Hello, good morning. Happy New Year. Hi guys, happy new year. Hard start to the year, more like it. Sorry, I'm definitely being a bit slow in this start of the year, but the answer is not clear to me and I think the question is straightforward. Why isn't there any volume drop through in the second half? What has changed versus the first half? Is this driven by bigger promotional intensity in grocery or is Argos dragging the performance? Or is there any other reason behind the implied 2H profit downgrade, I guess?

mean i think let's thank the thanks the question let's just let's just recap on the kind of key points we shared this morning so the first point is that when we shared our uh strengthening of profit guidance in november you'll remember we said that against the context of we were going to sustain our competitive position throughout the year and we were very clear to signal the balanced choices that we would make to invest in the strength of our offer which we planned through the course of the year and we signaled in november to you And we did that at the same time as we strengthened our guidance from around a billion to at least a billion. And we shouldn't underestimate. I know none of us do. When we started this year, there was a lot of uncertainty. And therefore, we laid out profit guidance that suggested a profit outcome that could have been below a billion or could have been above it. And in November, we were able to say, as well as continuing to invest in the strength of our offer, we were able to strengthen our outcome to more than a billion. And so we were very clear about that in November. And as I've described this morning, we've delivered a quarter three outcome in grocery exactly as we expected. We delivered for customers a really strong plan. We were able to exit clean. We invested in the key areas of the shopping trip. One of the things I would observe is that we really invested in store operations. We invested in colleagues in stores. We invested in availability in a way that I think gave us a real advantage compared to some of our competitors who either didn't do that or pulled back on some of those choices when volumes got a bit tougher. So we're making choices here, obviously, for the weeks of the quarter, but we're also making choices here to sustain the strength of Sainsbury's grocery performance over months and years to come and that's why we laid out that guidance in the way we did in November and while we're pleased to be able to confirm today that despite some softening in general merchandise which to your point definitely happened over the Christmas period we grew volumes but there was some softening there so Argos performance will be broadly flat over the year but a bit down in the second half that actually we can sustain what we said in November. We can also improve our cash outturn, as Brad had shared, to 550 from 500. And we can continue to make the right decisions for Sainsbury's. We would expect, based on what I said earlier in the call, which is ahead of a billion, but a bit less than last year, is our sort of central view with eight weeks to go, that that would mean... Sainsbury's profits would be a bit up in the second half but we've got six or seven weeks to go let's see how that plays through but we're very very encouraged with the performance we deliver this year given the start point that we had to navigate in all the things that have come at the industry okay that's good thanks next question is from Corinne Elias at Barclays please unmute yourself and begin with your question hello Corinne happy new year

Please unmute yourself and begin with your question. Hi, thank you very much and happy new year as well. A lot of my questions have been answered, but I just wanted to pick up on a few things that you said that were very interesting. Obviously, you stuck to your first decision throughout the year and delivered a very strong set of results. Some of your competitors yesterday seemed to suggest that there was definitely some more value investment and value obviously fear of volume probably being a little bit weaker and competitors basically pricing strategies as well do you feel that this was probably more of a function of perhaps christmas coming in a little bit later or fear around that i know it's difficult to read into january there tends to be a lot of noise in particular around everyday low price but anything that you can pick up that would be very useful thank you

OK, thanks. So, look, I think, you know, just maybe just to double down on a couple of the points that we've said that we started in April with a very clear priority for the year to stay in our competitive position. As I said earlier in the call, one of the things we're really encouraged by is the consistency, actually, of our volume performance throughout the year. So around 2 percent, but Q2 got a bit better than Q1 and Q3 got a bit better than Q2. So I think what we've seen over the course of the year, is actually the underlying strength of our grocery business, powered by value, quality and service, has given customers confidence to shop more with us. Look, I think coming into the last few weeks of the Christmas, obviously the market softened a bit on volume. We also anniversary a very strong comp last year. So in that last few weeks, we were anniversary of a strong comp as well as delivering that strong growth that we've described. And look, inevitably, as volumes came off a bit, I think we saw in a number of brands, you know, various, you know, activities that kind of put more, I would say, you know, more pricing into the market, you know, in short term responses. We didn't do that. We stuck to our plan, as I said. know building a plan getting the whole team really engaged in it and then delivering it was was the route to our success this christmas um you know as i said we invested in things like availability store labor you know nothing's more frustrating as a store manager than not having enough labor to run the operation the biggest weeks of the year um and so we really backed our team to make sure they could show up brilliantly for customers And because of all of that, we think we've got the balance right between our value position, our operations and then exiting really clean from Christmas. And then on the theme of exiting clean for Christmas, I think that we come into this January, again, with a very strong focus on value. It's one of the things we always focus. focus on very significantly this time of year for all the obvious reasons as customers tighten their belts even further. And so the strength of our already price match, EDLP, is a real focus on everyday basics in the shopping trip for customers. And then Nectar and your Nectar prices we've spoken about. And you'll see if you look in store online just the strength of our Nectar offer as we come into early January. Thank you.

The final question is from Clive Black at Shore Capital. Please unmute yourself and begin with your question.

Hello, Clive.

Morning, Simon and Blannard, and many congratulations on the award of your CBE.

Well, thank you. And definitely one for our entire team, just a massive team effort from everyone at Sainsbury's over the last few years. So a real tribute to all of our team and colleagues.

Well done. So first of all, you've mentioned your nectar prices quite a few times this morning, and thank you for the presentation. How far through its maturity journey do you think that mechanism is? Are you in the foothills or is it actually quite advanced now? That's my first question. And then just secondly, I'd be interested to know your thoughts on category performance across your sector. a grocery assortment in particular this year, whether you're seeing any particular changes. I think alcohol has, for example, been mentioned in a number of dispatches and you've talked about fresh food. And in terms of where you see categories going, how well positioned do you think Sainsbury's is for the direction of travel of the market? Thank you.

Thanks, Clive. Look, I think, I mean, honestly, we're still in the relatively early kind of phases of personalized value. You know, we only added it for all of our supermarket customers this summer. So this was the first Christmas, obviously, customers could access that value. Now, for obvious reasons, we see personalization, loyalty, and then the use of that more connected relationship with customers as a massive source of value. And the possibilities here, both in what we deliver for customers, but also in the value we can create through the partnerships with our suppliers, in the way that which retail media works, is a very significant focus for us. And Mark and his team are leading out some really ambitious work thinking in this space about how we continue to build our ambition. If we think about what we've done, we started back in April 23 when we launched Nectar Prices with about 300 products. We've scaled that to more than 10,000. And then at the same time, we started at the personalization end of the telescope rather than the universal end. And so we've been building these capabilities in your Nectar prices over the last couple of years. And we see major opportunities to extend that as more and more customers buy into the importance of personalized value. I think in the end, it's a balance. You've got to have universal value that everyone can access, as we've described, and you've got to have unique personalized value. And I think the big thing we've got to think about is customers whether they be in store or online, in many ways are being bombarded with messages of all sorts of different value positions. One of the reasons why I think you've got to be really sure about adding different elements to a value proposition beyond what's really working, because what you don't want to do is add confusion to the mix. What you want to make sure is customers see the value that they have, really respond to it and feel that it's really right for them. And then our job as retailers is to create value from that connection with customers, how we use that data, how we build partnerships with our suppliers and our partners. And I would make the point actually just linking to retail media, the step up we saw this year in brand partners and clients wanting to work through next to 360 and with our new platform pollen to put campaigns in place for customers to be able to get value all of those things connect together to personalization loyalty uh retail media and the huge opportunity that we see in front of us so i hope that gives some color there and just you know massive credit to our team that are really pioneering in this space because you know i can't imagine if you don't have these capabilities how how you can win in this sector when we look over the next 10 years plus. It's going to be such a key part of strategic capability in grocery.

So I was just going to do you see do you see a rising proportion of your what might call price investment going into personalized pricing? Or is it about right at the minute in that respect?

Yeah, I think it's about right. I mean, it's at least 25% of our price investment, obviously, depending on different times of the year. I think it's about right. And obviously, we'll continue to look at how we balance that. But no, I think where we want to be right now, we've got to about the right balance. I'm sorry. Thank you. No, no. Really good. Like super relevant question on on kind of how customer behaviors are changing, what that's meaning at the category performance level. But I think, look, you know, there's a sort of broader context here and there's what happens over Christmas. Now, you know, whatever we might like to think about people eating differently in the weeks of Christmas. No, for sure. This year, people bought a lot of mince pies. They bought a lot of chocolates. they still built a lot of alcohol right so you know we saw some records actually particularly in areas like you know christmas bakery and confectionery um huge volumes went through in those areas we saw a very big shift up in our market out performance on low and low alcohol The market differential of our performance compared to others really, really stepped up there. So I think that, you know, that's been a trend that's been building for a while and further accelerated this year. I think more broadly to the point is, you know, it's very clear, isn't it? Customers are thinking about value and they're increasingly thinking about health. Now, as a brand, we've positioned ourselves in the health space over a long period of time, and the options that we've given customers on healthier choices, on more protein-based products, there's been a real strength of what we've done. And look, I think the strength of Sainsbury's fresh food business really comes to a fore as this kind of shift begins to take greater velocity. Our fresh food business grew 8% through the quarter, but you know through all of what we've done on Food First, we put our fresh food business at the heart of that. um and you know what we've done in areas like fruit and veg protein you know building those long-term supplier relationships why are they so important means that we've always got the products customers want to buy as they shift more to healthier choices so it's been a very much sort of a joined up part of what we've done and look you'll see us do lots more in the healthier space there's a big big campaign going to come this year linked to nectar again lots of product development happening in this space so something we listen very closely to customers on and you want to make sure we play to our strengths of a you know a very strong fresh new business that can really meet more of those health needs as they build thank you thank you very much well done thanks glyph that was our final question i will now hand back to someone roberts for closing remarks OK, well, a huge thank you, everyone, for joining us this morning. Really great to hear everyone's questions. Really good questions. Really good to spend some time just reviewing the quarter. And Bernard and I very much look forward to seeing everyone in April for the full year. Stay safe with the weather out there. Thanks for your time this morning and see you soon.