Continued progress in transforming the Group

J. Sainsbury plc, the major UK and US food retailer, today issued the following Trading Statement ahead of the Group's Annual General Meeting.

Sainsbury's Supermarkets

  • Strong sales performance
    • total sales up 8.6%, with like-for-like sales growth of 6.0% (excluding petrol).
    • significant investment in customer service, pricing, and promotions.

  • Company Profile:

    J Sainsbury


    Store reinvigoration programme accelerating
    • a further 14 stores refurbished and 1 store extended in the first quarter
    • 37 refurbishments and 3 extensions planned for the second quarter
    • sales uplifts continue to be strong
  • Transformation programme on track
    • confident of achieving £150 million cost saving target for the year
  • Starting to deliver a sustainable recovery

Shaw's (US)

  • Total sales up 7.2%, with like-for-like sales growth of 3.8%.
  • Conversion of 18 former Grand Union stores on track.

Sir Peter Davis, group chief executive, commented :

"I am pleased with the encouraging progress achieved in the first 12 weeks of this financial year, with strong sales growth in both Sainsbury's Supermarkets and Shaw's. In the first six month of the calendar year Sainsbury's sales growth has beaten that of the industry.

"This is the result of increased marketing and local promotional support together with a strong customer offer. We have made considerable improvements to our range in the last 12 months as demonstrated by the success of 'Taste the Difference' and of 'Blue Parrot Café.'

"In pricing terms we are more competitive, in spite of major campaigns by our largest competitors; we are therefore offering our customers even better value.

"We have made significant investment in additional labour at store level to reduce queue lengths as part of our campaign to deliver great service. We have also invested to increase short-term distribution capacity to improve availability for customers.

"The combined effect of these efforts is an improvement in our 'like-for-likes' and a growth rate which is at a level above those seen at Sainsbury's for many years. We see encouraging improvements in customer perception through our research and through our 'mystery shopper' visits. These investments in the customer offer have partially offset the benefit of the strong sales growth achieved in the first quarter.

"The entire food retail market is enjoying a buoyant phase caused in part by high levels of disposable incomes and also, to some extent, by the aftermath of 'foot and mouth'. A year ago we were running behind the market and we are encouraged that today we are at least holding our own in a very competitive environment. Higher food inflation reflected both the deflationary environment last year and weather-related fresh produce pricing pressures. We experienced a tougher trading environment for petrol, where higher supply costs and intense competition squeezed margins in the quarter.

"Our three-year transformation programme, while still in its early stages, remains on track. We are confident of achieving our stated target of £150 million of cost savings during the year. As we have indicated previously, stepping up the store investment programme through the remainder of the year will give rise to additional operating costs. The temporary disruption to stores will have an impact on like-for-like sales.

"To deliver the business transformation programme, we need to take a more end-to-end view both in strategic planning and in the day-to-day operation of our business. In this context I am delighted to announce the promotion of Sara Weller and Stuart Mitchell to two new posts of assistant managing directors of Sainsbury's Supermarkets, reporting to me.

"Stuart takes overall responsibility for retail, trading and the supply chain, and Sara, in addition to her marketing role, takes overall responsibility for strategic planning, formats and Sainsbury's Bank.

"Robin Whitbread is disappointed not to have been offered one of these positions and will step down as retail director and leave the Group board in the autumn. We thank him for all he has done during his 32 years with the company and wish him well in the future.

"I am confident that we are on the right course, and starting to deliver a sustainable recovery in Sainsbury's Supermarkets.

"Shaw's sales continue to grow strongly, with total sales growth of 7.2% and like-for-like sales growth of 3.8% in the quarter. The improved like-for-like growth reflects the benefits of our store upgrade programme, as well as the continuing enhancement of the quality and range of our offer. Seven Star Market stores have been re-badged successfully and the conversion of the 18 former Grand Union stores acquired in March is proceeding to plan".

  Sainsbury's Supermarkets    
(Unaudited)
Incl.Petrol
 
Excl.Petrol
Shaw's



Like-for-like sales growth %
5.6
 
6.0
3.8
Net new space added %
2.4
 
2.6
3.4



Total sales growth %
8.0
 
8.6
7.2

 
 

Sainsbury's Supermarket's inflation in the Quarter was 0.7% including petrol and 2.1% excluding petrol.

The Group's Interim Results will be published on Wednesday 21st November.


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