UK: J Sainsbury plc – Third quarter trading statement

12 weeks ended 6th
January 2001

• Recovery plan on track
  
• Sainsbury’s Supermarkets
  sales up 3.2%: like-for-like sales up 0.7%
  
• Shaw’s like-for-like
  sales up 1.3%

Sir Peter Davis, group chief
executive said:

“Our third quarter results
in both the US and UK supermarkets are in line with our expectations and are
against tough comparatives with the millennium Christmas last year. In Sainsbury’s
supermarkets we had a record Christmas week in which we beat all of our budget
expectations and where our supply chain coped admirably. The emphasis we have
given to fresh foods paid off and we traded with good product availability throughout
the Christmas period.

“For the third quarter our
results are very much in line with expectations and over the quarter as a whole
we saw an increase in customer visits of 4.4%. In view of this and the improved
performance at Shaw’s I am happy to confirm that we continue to be on course,
as we said at our interims, to meet our aim of stabilising underlying Group
profit before tax* and e-commerce in the current financial year.

“We are, therefore, in the
process of achieving two of our major short term objectives in Sainsbury’s supermarkets.
That of stopping the decline in profitability and reversing the decline in customer
numbers which are now showing an encouraging improvement. We are still in the

early stages of our three-year recovery programme and are making good progress
in upgrading our infrastructure. Whilst the overall like-for-like sales are
still only showing modest improvement I am encouraged by good results from those
stores in which we have invested. Stores upgraded during the year have shown
a 7.1% uplift in like-for-like sales. During the quarter we extended 9 stores,
refurbished 4 and are on track to complete 35 extensions and 17 refurbishments
during this financial year. We are in the detailed planning stage of an accelerated
programme which will deliver next year a further 100-150 improved stores.

“To achieve this accelerated
plan we made some organisational changes just before Christmas designed to drive
the roll out of the store reinvigoration programme and to give greater clarity
and focus in the trading area. We are establishing three separate business units
for fresh foods, grocery and non-foods. We have moved responsibility for our
pharmacy and petrol business alongside other non-foods to establish a third
major trading area. We recognise that in our bigger stores we need to complement
our focus on food with an appropriate range of non-foods. We are establishing
format teams within trading to give us greater flexibility to range and market
stores to their local communities.

“As we have said before,
this is a three-year programme and I am pleased to report that we are on track.
The sale of Homebase, which we announced on 22 December 2000, will ensure that
the group can focus management and financial resources on the recovery of our
UK supermarkets business.”

* Before amortisation
of goodwill, exceptional costs and non-operating items.

Sainsbury’s Supermarkets

 
Homebase

 
Homebase’s total sales growth was 5.7% including like-for-like sales growth
of 5.0%. Christmas trading was strong but the post Christmas Sale started slowly
due to adverse weather conditions across the country.
 

 
Shaw’s total sales increased
by 0.8% in the third quarter with like-for-like sales growth of 1.3%. Shaw’s
remodelled and extended stores which include the improved customer offer, coupled
with improved distribution and availability, have brought about this significant
improvement over the second quarter’s 1.1% decline in like-for-like sales. Shaw’s
loyalty card, launched at the beginning of this quarter, has been extremely
well received by customers.

The acquisition of 18 Grand
Union Stores is expected to complete sometime during the fourth quarter.

Contacts:

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