J Sainsbury Plc Ord

Do not eat breakfast. So many trends. You need to be doing the 30-30 method with our doubt. So much jargon out there.

But when did you start needing a PhD to eat healthily?

Here at Sainsbury's, we're kicking back against all of that noise.

We're on a mission to add more fruits, vegetables, and fibre to the nation's diet.

So full-on fibre labelling

So you can spot the good stuff on shelf and make delicious meals at home.

So let's get cooking. This is a delicious recipe that's full on fibre, packed with red lentils, loads of fresh veg, herbs and spices for a bit of a kick. It's one of my favourites.

Call it fibre maxing if you like, but I call it chucking a tin of butter beans into a creamy carrot and coconut dal.

So good, so delicious, and I can't believe how easy that was to make.

And the best bit, it's affordable too.

Good food should be for all of us, no matter what our budget.

From our value range for price match products, we're helping people get more fibre for less. Here's to good food that's full of joy, not jargon.

Hello and welcome to the Sainsbury's 2026-27 trading statement and a Q&A call. On the call this morning is Simon Roberts, Chief Executive and Blathnaid Bergin, Chief Financial Officer. I will now hand over to Simon Roberts for the presentation.

Well thank you and a very good morning everyone. Thank you for joining us this morning and welcome to our first quarter trading statement covering the 16th week to the 20th of June. I'm going to cover our trading performance on the front end of the night. We'll be happy of course to take your questions. But before we get into the results of that I just want to call out the

The immense job done by all our colleagues, farmers, suppliers, refrigeration contractors, our entire team in last week's exceptional weather conditions which came fully in the first week of our second quarter.

We had a strong sales week last week in both Sainsbury's and Argos but not without some operational challenges given the unprecedented temperatures across so much of the UK and it really was a phenomenal team effort.

with all of our team working round the clock to make sure we recovered as quickly as we could into this week and of course in preparation for another heatwave to come next week. So a big thank you to all of our team and all of our partners who supported.

So you'll remember this slide from when we last spoke together in April when I shared it with you there and I said that we will well place and navigate the year ahead and that through doing the right thing for our customers, colleagues, suppliers and farmers we would continue to outperform the market and strengthen our business. Now 16 weeks in, we're doing exactly what we committed to do. We've made an encouraging start to a new financial year with continued volume growth and market performance. We know how tough it is for customers out there. The cost of living is still very much top of mind. And customers are looking for value now more than ever. And so it's been key to maintain a relentless focus on value, giving customers reassurance that week in, week out, they can rely on Sainsbury's for their big weekly trolley shop.

But we know that the customers being first choice for when they do their big shop is about more than just keeping our prices low.

It's also about delivering outstanding quality, inspirational and exciting product innovation. and Big The Supermarket Customers Trust for consistent availability, freshness and service. Now we've made big progress across all elements of our winning combination quarter and the operational momentum we have in the business is driving continued strong execution where it matters most to our customers.

And this is underpinned by the investments we're making in refreshing our stores, by improving the digital experience with greater personalisation, with the technology that's improving the shopping trip, AI and automation, and driving efficiency in our operation, and supported by the 1 billion pound cost saving programme.

The strength of our customer offer is evident in our sales performance for the quarter, with grocery sales growth of 3.6%, reflecting slightly lower inflation for the quarter and continued volume growth against a particularly tough comparative period last year. Two clothing and Sainsbury's general merchandise sales were down year on year, reflecting very strong performance last year. Two outperformed the soft market, and we continue to benefit improved availability and improved style credentials. While general merchandise sales were impacted by some seasonal weakness, but more significantly by our ongoing planned programmes to tighten ranges and reduce space allocation in favour of food. and Encouraging Bolling Growth is offset by the impact of lower average selling prices with sales marginally down by half a percent. So looking here at the Nielsen Epoch Street of Market Share, in a quarter which has been characterised by a number of headwinds, a more cautious zoom out, and a comparative impact by cyber issues and the less strong weather, we have continued to outperform the market. Our outperformance narrowed a little this quarter, but we fully expected this, and we continue to expect to outperform the market by around 1% this year. What this really demonstrates is the continued strength of our customer offer across value, quality, availability and service and how well we have executed our plan for customers. And this has been particularly true in the moments that really matter. The key events and occasions where customers are choosing Sainsbury's to celebrate. It is these moments that really play into our core brand strength in fresh food, innovation, in quality and in service. Now when the sun shone at its highest, we fully captured the benefit of outstanding fresh food availability and lots of summer newness across barbecue and sharing plates. As a result, alongside these key events, we outperformed the market during the May heatwave. As I've already said, we had a positive start the second quarter last week. We continue to remain tightly focused on giving customers the confidence they can trust us for reliable value. And you can see here our price position at the end of this first quarter versus the end of the 25-26 financial year. As a reminder, the value index we are showing you here is across the widest comparison you can make. Although worth noting doesn't reflect the additional value we're offering to customers who personalise your next prices. The orange line is showing price parity, and as you can see, we have strengthened our value position versus most competitive retailers. It is the consistency of our delivery on value that customers are really responding to, with value perception improving year on year. We've been maintaining the biggest out of the price market for over a year now, and customers continue to respond positively to the breadth of range of our supermarkets and our convenience stores. and more and more customers benefiting from the great value of next prices. Now and around 11,000 products and of course, personalised your next prices. We now have almost a million more customers regularly using digital access, savings in Sainsbury's and across the full coalition. And as you know, this is the fuel that powers our next 360 retail media business. So this increased participation is also helping us further accelerate growth. Now we've delivered another strong performance in Taste the Difference this quarter with growth on growth against an outstanding quarter last year. Our passion for innovation remains a key point of difference. We've launched 380 new products this quarter, 50% of which are Taste the Difference, expanding our delicious deli and picnic ranges, as well as extending our restaurant quality discovery range to barbecue, to make sure customers are well set for every occasion this summer. and our work in innovation is also supporting our strength and health commitment which we launched this quarter and you saw in the video at the beginning of the call. We know that customers are increasingly focused on making more conscious, healthy food choices and so we are going further to make healthy, everyday essentials more accessible and affordable with a real focus on fiber, fruit and vegetables. We're launching a number of new and reformulated products and we've introduced full-on fibre labelling across more than 500 products, over 100 of which are included in our price match or next to prices. Now so much of our progress here on leading innovation and our outstanding quality and freshness is only because of the strength of our long-term partnership with farmers and suppliers. They are the driving force behind our security of supply and supply of some of our favourite, delicious, delicious berries. And this means that we consistently deliver great quality and great value for our customers. As we amplify our strength and quality and extend our premium rates, customers are noticing. This quarter we've moved closer to the quality perception of our premium testers.

And with the brilliant work of our innovation team and our strong pipeline, sickly on discovery, we are confident we'll make further progress here.

What is equally good to see is that we're extending our lead on quality perception against the rest of the market as well. Because quality isn't just about taste the difference. It's about the standard of our products across the full basket. Our range and the strong availability and the freshness we maintain right across the shop. And it's that which really resonates with our customers.

which is this combination, our winning combination, value, quality, availability and service, which is driving our momentum and continued outperformance in the market.

We continue to lead our customer satisfaction supermarket, widening the gap again this quarter.

and we've improved our groceries online as well. This really reflects the strong operational momentum we have in the business and the end-to-end focus we're now achieving.

Having brought together the leadership of our stores, supply chain and logistics, this is now delivering a step change in availability. And we've been really, really focused across the entire business this year on improving all aspects of the shopping trip for customers.

We know that the amount of change we have been making to a number of stores has disrupted customers over the last 18 months. So we set out this year to ease some of the pinch points as we make changes, but also on helping customers recover faster after we make change.

And the stats here across the customer perception scores show good progress in the areas, particularly availability. Now we talked to Nathan about the fact that we put in place a fully dedicated Argos management team. There is sharper focus and new energy in the business. We've made good progress, spending choice through more supply-directed build additions, improving the digital journey and driving higher participation. And we've introduced AI-led stock forecasting and routing for the first time, already delivering significant benefits.

We've also launched a new day.

More than a thousand customers have opened since the February launch and we are underway with transitioning existing Argos credit customers across. As you can see from the chart on the right-hand side, we've delivered another quarter of volume growth, despite significant drag in seasonal areas like garden furniture, with a much lower colder and wetter start to the summer. We did have some benefit sales of fans in the May heatwave week, but the main drivers of volume growth were homeware and toys.

Now as we've highlighted before, these are lower categories.

So alongside continued pricing pressure in a very competitive market, this is driving average selling price dilution and sales growth.

So in conclusion, it's been an encouraging start to the year.

Against a lot of headwinds, we have continued to outperform the market and we've grown volumes in grocery and at Argos. We've kept a super tight focus on value. We've executed well with a really strong operational performance and we're continuing to accentuate our real points of difference across quality, range, availability and excellent service. And this is reflective of improvements in customer satisfaction and very strong colleague engagement. So, we're confident we'll continue to outperform the grocery market. Our guidance, profit and cash, is unchanged. I'm sure we'll have plenty of questions about that, and there's a good degree of caution still in there. This reflects the fact that consumer sentiment is not strong, with a good deal of uncertainty in how things will shape up for them. There was a lot of uncertainty in terms of how the impact of conflict in the Middle East will impact the economy and consumers. Our guidance range gives us the capacity to make the right, balanced choices to support our customers. The consistent momentum of our business has proved time and time again that it is right for us to do this. Building a stronger business that delivers for all our stakeholders. So thank you for taking the time to listen and with that, Brun and I will now be very happy to take 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 are dialed in, please press star 9 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 9 when we try to get back to you.

We will pause for a moment to allow questions to enter the queue. The first question is from Manjari Dhar at RBC. Please unmute yourself and begin with your question.

Hello, Manjari.

Good morning. Morning, Simon. Morning, Blan. I'll keep it to one.

I was just wondering on Argos.

Given the volume growth you've seen and the productivity improvement you're coming through, does that change your view on expectations about this year and how should we think about it heading into the coming year? Thank you.

Thank you.

Thanks, Manjari.

The next question is from Isabel Debra Morgan Stanley. Please unmute yourself and begin with your question.

Isabel, good morning.

Hello, good morning. I have a guess on one question.

Could you comment a little bit on the competitive environment that you need for your businesses? Because industry days of promotions have been stepping up for over 30 consecutive periods. So how would you characterize the level of promotional activity in the grocery market and what return you're getting on those promotions and volumelisticities? Are you seeing any change in competitiveness there? And then also in general merchandise, you've noted that ASB is trending down. Is that the usual consumer weakness or are you seeing some big competition in that segment as well?

Thank you. Okay, well let me take Cam the Grocery and then we'll talk in general. I think a couple of key themes are very clear here. I think the first thing is, as we've seen, volumes in the grocery have stepped back, volume down, the industry over the industry have been up for us.

I think it's very clear to see that the continued focus on very strong value offers is incredibly important.

That's been the route which we've secured volume growth again in the quarter. The market continues to behave very rationally, as well as all the obvious reasons. I think there's a really clear focus on providing customers with value. and that's meaning that whilst volume is down, promotional spends up a bit. I think the branded manufacturers are very keen to make sure that volumes are protected as much as possible. Having next prices is an incredibly important platform because it means we can give customers both value in their shop but also personalized value as well.

We work very closely with our suppliers to make sure that that promotional investment goes in the best place to support, volume, but also give customers what they want. So I don't think we're going to see any less of the focus on value over the balance of this year.

Consumers are very concerned about cost of living. As you've seen in our statement today, value for money is absolutely the front of mind. So our job is to work closely with our suppliers

Thank you very much.

I think the reality is that inflation will get back a bit in the first quarter to quarter four. There's definitely pressure in the system.

I guess the question is to what extent will we see inflation pick up over the months ahead.

We certainly think by the mid-summer we'll stop to see some of the pressure building from the fresh food chains. I think overall it's encouraging to see a lot of the trade bodies adjusting down some of the estimates that they suggested earlier and that all links back to what really happened with volume.

In general merchandise it's a different situation given obviously a much more subdued customer. What we saw in Argos was volumes up in the quarter which we were encouraged by.

We had a strong plan for the quarter and the team did a really good job to make sure we were where customers were and we met customers with an offer that was going to work for them. Categories like toys, homeware, strong informants, but higher ticket item, more challenging furniture, high ticket item elections, despite a bit of a pickup on TVs into the World Cup.

So I don't think we're going to see a change in the TV market.

That's the reason why, as Blathnaid said earlier, we're very focused on driving the transformation for Argos, but we broadly see profits back here on year. Thank you. Thanks. Thanks.

The next question is from Rob Joyce at the same BMP Parallax. Please unmute yourself and begin with your question.

Hello, Rob. Morning, Simon. Morning, Brian. Thanks for taking the question. Just on trying to understand now where we sit versus the four-year group guidance, if we continue at the levels you've seen in the first quarter, And we're tracking towards the top of the range of that guidance. And just within that, the pricing improvement versus the rest of the peers is up by you or it's come towards you. Thank you, thank you.

Thank you very much.

Somewhere around 10.45 we can see a route to, which clearly is towards the upper end of our guidance.

We've clearly got a range, and that's because there's still a lot of uncertainty out there.

How consumers will behave, the situation in the Middle East.

And so, pleased with the momentum, but too early at this point in the year to be able to have a second portrait and the rest of the year we'll stay out, which is the reason why we've got our guidance where it is.

Thank you. I just hope you have time on the relative pricing. As you know, we've been incredibly focused on our value position.

And what we've done in this day, you know, very focused within Tramlines. We've set out the biggest price match in the market. And next price is around 11,000 products. and what we've done there is continue to execute that plan with a strong focus on the central plate which is within the big basket and it's working very well with customers. I made the point last time we talked that customers are really responding to the fact we've got a proven formula and we continue to stick with it so customers will come to Sainsbury's and know exactly what they get

We haven't chosen or specifically decided to move our pricing position to others. We've done what we set out to do and that's what you can see in that pricing index. As a result of that, our position continues to be strong and we continue to execute exactly what we've always continued to do.

I make that point and link to your first question.

Whilst our ongoing retail operating year-on-year, we continue to be very strong value, but we expect to see profit up year-on-year, and we're very focused and we have a clear plan to that. Very clear. Thank you. Thanks, Rob.

The next question is from Matt Clements. Please unmute yourself and begin with your question.

Hello, Matt.

Hello, Matt. Thank you for taking my question. It's just from retail media. Have you seen a material step-up activity into the World Cup? So is that optionality in your out or is that something you've factored in?

So maybe on retail media planet we can just give a bit of a sense of how we're feeling about our progress on the retail media planet and I'll come back a bit on the woke up behaviour.

So look, we're really pleased with the progress on retail media. We committed at the start of this plant to deliver an incremental million profit. We're well on track with that. When we gave the guidance at the start of this year, we knew there was going to be a word cup, so that was factored into that guidance as well and thinking around what the opportunity there was for us.

Yeah and I think it's obviously a really significant opportunity with not only the World Cup but a big summer of sports to make sure that our product offer is really meeting customers with what they expect but also opportunities for more customers to buy into next prices and your next prices and what we've seen is as I mentioned earlier to Isabel's question you're a real opportunity to work with our suppliers and partners to make sure that we bring the offers in from and that obviously brings more customers into the next ecosystem and therefore the value of that is clearly one of the key drivers of what we're then taking to the next 360. So lots of momentum there and this summer we'll continue to accelerate that. Thank you, thank you.

The next question is from Will Woods at Burstein. Please unmute yourself and begin with your question.

Hello Will, good morning.

Hi, good morning. The first question is just on the UK property. You've said that volume has gone down into the clothing market, which is a lot softer, and basically the face sales have slowed down, even though that's hard for comps. Do you think you've seen any slowdown in the consumer through Q1 and any kind of bifurcation in consumer behaviour? Thanks.

Thanks, Will. Let me just, I think, you know, a couple of key points in our statement.

Well, look, the first point to make is we grew volume to share. And I think that shows the strength of our offer relative to the wider market and how it continues to really deliver for customers.

And actually, to your point, you know, we saw clearly volume growth, but I don't taste the difference at this specific point. When you look at the level of growth year on year on year on year on year we're delivering, there was something over 80% in the first quarter last year. Thank you very much. In places, but overall, we're pleased with the performance. When you're taking around all of the headwinds of last year and why the consumer situation. I think on General Merch, there's a couple of things to say there. Look, I think on General Merch, we have a very clear and planned programme to take space from GM and invest that in food. And that's one of the things, as you know, we've set out to do over the last few years. That's really working for us. That's one of the reasons. Thank you very much. and some of the other factors. So when you stand back from this, actually we're really encouraged with our relative market and as we get our offers stronger and stronger and more and more customers do their big weekly shop with us, now we continue to convert more customers into the brand.

Excellent, thank you.

The next question is from Sridhar Kali, SBS. Please unmute yourself at the beginning of the question.

Hello, Sridhar.

Good morning, Simon. Hi, good morning.

Quick one then, just to go back to your point, Simon, on the August transformation. You talked about... Sharks and New Energy and the Graham's team. You talked about a couple of efficiencies. Maybe you should admit them, not necessarily this year. Does that give you a greater confidence in transformation in terms of cost and also the top line over the medium to long term?

Yeah, thank you. I'm sure between Bud and I, there's actually some really awesome progress to build here.

And I think the three big points are that we said we would commit to improve our range. And we've added thousands more products, and obviously we're building up marketplace preparations for this year.

Simon mentioned a little bit about some of what we're doing on a daily basis and how we're using AI.

That will help us drive a better customer proposition in the locations that our customer wants it and really get the availability going in August as well. And then you add to that August pay, which we launched earlier in the year. It's doing incredibly well. New customers coming in, a modern offer, and it's really appealing to our customers and enabling the sale. So when I stand back and look at what we've done, it's a higher direction. Thank you. Thanks, Rita. Thanks, Rita.

from Xavier Lemene at Bank of America.

Please unmute yourself and begin with a question.

Hi Xavier, thank you for asking my question. Hi.

So you deliver another quote of strong growth and market checking, but can you just give me a sense of how much is true, what is the intention to rent a very big loyalty, loyalty versus potential investment, and talking about investment.

Do you think that would you change your investment or whatever you've got on the other side, is the competition tougher or do you stick to the cost savings to invest in prices?

Thank you. Okay, well let's take a broad picture of what we've been doing on value and then specifically what we've driven it in a quarter.

Look, I think as you know, we've invested over the time of our food first and next level plan around 1.3 billion food value and made that investment much earlier in the plan and we continue to see the benefits of that in customers trusting the value of the next market and the strength of prices.

I think what we're seeing in the course that we've just reported is the benefit of that ongoing consistency in our value. And then in addition to that, a real step up in productivity, we've really been seeing fantastic response across the business in raising our ambition and availability. And we're seeing the best availability within a long period of time. Thank you for watching.

The strength of our quality position becomes even clearer to customers, and you saw in the charts how much we're gaining further advantage to the rest of the market and the retailers too.

So I think it's a combination of all those things, which means that we're winning more of the weekly shop, and that's the core of our growth in volume again in the quarter.

Obviously a tougher market, our volume also stepped back. Thank you very much.

It's very much about having the right balance between investment in value and delivering a growth in return profit this year. And that's what we as a team are very focused on doing. We expect to grow these operating profits year on year, whilst at the same time delivering customers the value they expect and trust from us. Thank you, very clear. Thank you, thank you.

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

Morning Clive. Morning Clive.

Morning team, I'm in the middle of nowhere so camera on. In terms of food supply chain and your noise today, you're talking today around well-being. To what extent are they linked? To what extent is this a new development for Sainsbury's and what does it mean for shareholders? Thank you, thank you.

Thanks Clive. I think a couple of key things to your question.

The first thing you've heard us talk I think pretty consistently now about the importance of our long term supplier partnerships particularly in fresh feed.

And I think what we've seen in this quarter is how critical they are continuing to be in underpinning our performance for customers. When I think about the breadth of those partnerships across so many of our fresh supply chains and the big step on availability that we've seen, those two things are clearly connected. We've had record weeks in a number of key categories that we just couldn't have got the surety supply for. And that's now something that we're doing in meat and poultry and veg. These are really important things. Thank you for watching.

The accessible options on Healthy Choice are available for them at Sainsbury's at a price that's really, really affordable. As you saw in the film, there are just so many opportunities for us to really lead on this. We think Sainsbury's brand is incredible. We've had a really strong response already to Fibre.

Clearly there's a direct link back to the partnerships with our farmers and our source products that we need to be able to really deliver against us.

So this really is all about stronger fresh supply chains, a real focus on availability, giving customers what they want.

and then increasingly giving customers the healthy choices that they can trust Sainsbury's to deliver.

Much appreciated Simon, thank you.

The next question is from Benjamin Jonsweger at Deutsche Bank. Please unmute yourself at the beginning of the question.

Thanks very much for taking my question. Just one on space relocation and maybe one on food inflation. There's time. On space relocation, are you able to comment on the drag within general merchandise and clothing? Or perhaps ask another way, has there been any step up in the pace of that space rebalancing? And then on food inflation...

You mentioned that pressures in the fresh food supply chain may feed through over summer.

Has this largely been a function of biofuel, energy and freight costs with your long-term suppliers? And has there been any meaningful impact from plastic packaging costs to date?

Okay, let's start on the GM question. I think the key point here is we're delivering exactly the plan that we set out to do, which was, in many of our supermarkets, we had a very extended GM space with not good enough trading density. And so what the team have been working through here is how do we deploy that space into feed, and that programme's been a really important part of our next level plan, and Thank you very much. It takes time, obviously, for the new layout of the store to go down. But we've learned a lot over the last year about how to take some of that disruption time frame out.

And so roughly 3% of PM's space moved into food in the year. More stores to be converted as we come through the rest of this year.

And obviously benefits of food as we convert the space. And then I think on the sort of impact of inflation as you describe it, I think it's super clear, as we all know, a big component of food is energy cost, and so is the cost of energy being under more pressure, hence the inflation system. Cool, cool. No, I think there's still a lot of noise on inflation.

Inflation a bit lower in the first quarter than in the fourth quarter, but still a lot of pressure in the system.

So we'll have to see where that comes through. But I think, importantly, it won't reach some of the higher levels of forecast inflation that were suggested earlier in the year by some of the industry bodies. So I think the balance between inflation not lifting too much and keeping a stronger body performance are really clear to us all. And then in terms of the other issues about plastic packaging, all of the components that are driven by the increase of oil are obviously in our mind. The work we're doing is all about trying to maintain inflation as much as possible and working closely with our suppliers to do that.

Thanks very much.

The next question is from Elizabeth Moore. Please unmute yourself and begin with your question.

Thanks very much. Morning Simon and Blathnaid. Hi. Just wondering, on the Argos and GM performance, obviously you've got that headwind from space, but assuming that that was about 300 sips on GM, why do you think Argos has outperformed General Merch so much? Just any colour would be really helpful. Thank you.

I think we would say we're well down the track of the Argos plan and what came through in the quarter was clearly not a strong seasonal performance in quarter one compared to last year. Last year the sun shone for many more weeks than it did in quarter one this year.

So actually the Argos performance was perhaps even more encouraging given the weather conflict we faced last year.

As I said, we did particularly well in areas like toys and homeware. Good value, good availability. So I think we did a really good job in making sure we had good availability, good value where customers wanted to shop. I think the GM offer in supermarkets was definitely, as we delivered our plan, changed space, but also the seasonal impacts. We have a big seasonal dependency with Sainsbury's GM on very warm weather as well. So the impact of the year-on-year comp there brought some softness to the GM number two.

Thank you very much. Thank you. Thank you, Elizabeth.

The next question is from Francois de Gard at Kepler Shepro. Francois, good morning. Good morning. Good morning. Just a follow-up on this question.

Thank you. Thank you.

Okay, Francois, just to be clear, the 3% reduction in GM doesn't equate to the 3% increase in food space because the space of GM is much smaller in the overall store. So we've reduced our GM space by around 3% in the year. and we'll continue through the course of the rest of this year. Actually, particularly in some of our larger stores, some moves from GM to feed. It's a programme that's really working because, obviously, as customers change the way they shop, we can tighten the range of GM. Actually, we can achieve a higher sales density on a smaller business.

Thank you very much.

We've seen actually benefits of food in two areas. Obviously we're over the stores in the period. We said last time we talked to you that our new stores program is having about half a percent. And then in food, obviously dependent on the store, we move space to GM.

We invest that space in the four areas of food offer that we think are going to be most able to drive both profit density and improvement of customers.

So that's what we're looking for. Overall in the three years we will convert to 100 stores, but as I say it's 3% reduction in GM space is the key number there. And do you have the dependence that 3% less in GM equals how much more in food? Yeah, I mean, I'm not going to give you a specific quantum to that. I mean, broadly, what you can see is that we're reducing space in GM, we're investing in fresh food. And if you were to go to our supermarkets, you could see the proportion of space. in most of our supermarkets before we began this programme broadly two thirds of the space would be food and about a third would be clothing and GM and within the clothing and GM space about half GM and about half clothing so from that broad picture of our space you can get to somewhere towards 1% improvement in food space but it's dependent on the stores that we convert Perfect, thank you very much

The next question is from Isabel de Bremer at Morgan Stanley. Please unmute yourself and begin your question.

Hello again, Isabel.

Thank you for allowing me a second question.

I wanted to come back on the topic of the guidance. So having listened to everything you've outlined, it sounds like towards the top end, the guidance implies growth in the refill somewhere between 1.5 and 2.5. At the same time, you've mentioned that you aim to outgrow the market in terms of sales by one point. There's a benefit of retail media. You've said that the market is still rational. So how would I then reconcile that versus the guidance? And the reason I ask is because if I try to see what your guidance implies for the same margin, excluding Argos, it implies that it's probably going to be down.

So why would the margin be down and is that the right interpretation?

Could you just help us reconcile that?

Thank you. Well, let me say a couple of things here and then, Blanav, if you want to pause and answer it. Look, I think three points I would make. The first thing is we're 16 weeks into the year, so we're still at an early point in the year. There's a lot of uncertainty, which is why the guidance that we set out in April and and how we describe that is actually the case today. We expect a great retail profit year. We've given a clear picture of what that looks like. The 1025 plus financial services is around 1045. And we've a plan that's very focused on delivering that.

and many, many more.

and I would just make that point about balance choices being so important to us in the environment that's out there and we'll continue to make balance choices in order to deliver the profit outcome we've committed to but at the same time continue to grow our volume.

Great, and just to build on that, margin will always be diluted by inflation, particularly fuel price inflation as well, so that's the dynamics coming through in the P&L, P&L. But to Simon's point, we will make balanced choices as we travel through the year. What we've commissioned to is growing our retail operation year on year with the incremental financial services income as well on that.

The only other point we haven't mentioned in that sort of talk is that we continue to live next to 360. And as we grow our volume, as we talked earlier, I think one of the things that's important there is that we continue to convert that increased net participation into strength for strength 360 and 360. And we're very encouraged with the continued progress there.

Thank you very much. And just one quick follow-up, if I may.

In terms of the ability to absorb the headwinds from the balance of cost savings, am I to understand that a lot of the cost savings will be allocated into the R&L this year?

So what we've guided in Argus is profits year on year and we will make the choices as we travel through the year on how we deliver that and where we invest in the Argus proposition. So there'll be some and some we haven't discussed the exact split on the cost savings.

Yeah, and I think more broadly, you know, the billion pound cost saving ambition, we're very focused on what we need to do in this final year to achieve that, and that's clearly resulting in strong plans in Argos, and in strong plans in Sainsbury's too. You know, I'd reflect in the first quarter of the year, you know, we're on track in delivering our cost savings at the same time as we've seen improvement in our customer satisfaction performance, and I think that shows exactly the The balance that we need to achieve, which is proving what we do for customers, finding cost and efficiency, and delivering improvements in our results across the whole business this year.

And I think the other thing is when we stand back from Argus, we've got the dedicated leadership team in place and this is a real set up here. So they've got good momentum at the moment and what they're doing on the range, what they're doing on the competition and how they're really getting up to the cost saving program as well. So let's give them space to make sure that they're in a really strong foundation for the future.

Thanks Isabel.

Thank you. Thank you. Thank you. And the final question is from Harmahannock, PBS. Please unmute yourself and begin your question.

Thank you for taking all of that. Simon, just to go back to the value index, this time we haven't improved versus all of you, but I also realise this doesn't include the personalised investment. If you could just talk through that, like I think you talked about the fourth of... Both are author of their pricing message through personalised investment. Is that still where that is? Including that, would it have improved the value index? Would it have improved across all of the peer group?

Yeah, I mean, just to reiterate to the earlier point, we didn't set out to improve our value performance against competitors in the way that we set out to do. Delivered Against, and we've done that. That's what our customers want to see. So when you look at our performance here, what we've done is we've clearly made sure that we manage past inflation in the best way that we can, because we need to get inflation through to the shelf, of course, where there is inflation through, but doing that in a way that makes sure customers can trust the offer that we have.

I think then it's your question.

Within the range that you talk about, that's probably right. A proportion of our value investment continues to go into personalised your next prices. Actually, we're finding the traction of that becoming even more sticky with customers, particularly as we come to a period of time where you can access your next prices at the main bank and supermarkets as well.

And as you've seen, we're using more customers using your next. Thank you, thank you. Thank you, thank you.

Okay, there's no final questions.

That was our final question.

Thank you very much everyone for joining tonight. Good to be able to share the first quarter results with you. Obviously we're into the second quarter after a really strong start last week with more hot weather to come. Let's hope some more good results in the footballs come too. Thanks for your time this morning.

Catch up soon.