Sainsbury’s, a leading UK retailer, has unveiled its interim results for the 28 weeks ending on 14th September 2024. The report highlights “strong grocery market share gains” that underscore the company’s competitive position in the retail landscape.
In terms of performance, Sainsbury’s experienced a notable increase in sales, reporting an overall growth of 4.6%. Specifically, grocery sales rose by an impressive 5%. Furthermore, like-for-like retail sales climbed by 3.4%, complementing a retail underlying operating profit of £503 million—a rise of 3.7% compared to previous figures.
Additionally, the retailer reported robust growth in both Sainsbury’s and Nectar sales. Operating leverage, primarily driven by “strong grocery volume growth,” contributed to an 8.7% increase in Sainsbury’s overall performance. Notably, the total underlying profit before tax reached £356 million, marking a 4.7% increase, while the total underlying profit after tax stood at £76 million, representing a 51% decline.
Business Outlook
Looking ahead, Sainsbury’s expressed confidence in its ability to deliver strong profit growth for the full year. The company anticipates continued leverage from the impressive grocery volume growth that has characterized its recent successes.
Furthermore, Sainsbury’s projected that retail underlying operating profit would fall between £1,010 million and £1,060 million. This estimation translates to growth of approximately 5% to 10%, reflecting the retailer’s strategic focus on expansion and profitability.
Customers Opt for Premium Brand Products
Simon Roberts, the chief executive of Sainsbury’s, commented on the company’s robust performance: “Our food business is going from strength to strength and we’re making the biggest market share gains in the industry, with continued strong volume growth. More and more customers are coming to us for their big food shop, recognising our winning combination of value, quality and service.”
In addition, he highlighted the growing customer preference for premium products, stating, “Reflecting our leading quality, more customers are choosing Taste the Difference, with sales up 18%, the strongest premium private label growth in the market. And with the biggest ever increase in customers’ value perception, we’re outperforming the market across the whole basket, particularly in core fresh food categories.”
Roberts further elaborated on the grocery volume growth contributing to strong profit leverage at Sainsbury’s, despite challenges faced in the first quarter at Argos. However, he noted positive trends: “Argos trading has improved through the second quarter and in more recent weeks, so we continue to expect to deliver strong retail underlying operating profit growth and free cash flow generation for the full year.”
In line with its growth strategy, Sainsbury’s is now investing to expand its reach. Roberts indicated, “With strong momentum and increasing confidence in the strength of our grocery offer, we’re now investing to bring the best of Sainsbury’s to more people in more locations, including the recent acquisition of 11 Homebase and two Co-op stores.”
As the company gears up for the festive season, he expressed gratitude to the Sainsbury’s team, stating, “Our brilliant colleagues and suppliers are at the heart of everything we do, and I want to thank them for all their hard work as we set ourselves up to deliver a fantastic Christmas for our customers. As we head into the festive season, there is real energy and excitement at Sainsbury’s and Argos, and we’re expecting another strong performance.”
In conclusion, Roberts reaffirmed the company’s commitment to its stakeholders: “We remain very focused on delivering for our customers, communities and shareholders.” Through strategic investments and a focus on quality, Sainsbury’s aims to maintain its position as a leader in the UK grocery sector while ensuring a positive experience for its customers.
