• Sainsbury’s Supermarkets sales up 6.9%, with like-for-like sales growth of 4.8% (excluding petrol).

  • Shaw‘s sales up 3.2%, with like for like sales growth of 2.5%.

  • Preliminary agreement reached to sell Group’s interests in Egypt, resulting in an exceptional loss of between £100 and £125 million.
  • Sale of 22 Homebase properties agreed for £156 million
  • Objective to stabilise underlying Group profit before tax* and e-commerce for the year to 31 March 2001 expected to be achieved.



Sir Peter Davis, Group Chief Executive, said :

“Last year our priorities for the Group were to reverse the decline in profitability in the UK supermarkets business, to stabilise underlying Group profits before tax* and e-commerce, and to focus our activities around food retailing and related activities in the UK and US. At the end of the fourth quarter we can report real achievements in each of these areas.


During the fourth quarter Sainsbury‘s Supermarkets recorded total sales growth, excluding petrol, of 6.9%. Like-for-like sales, again excluding petrol, increased by 4.8%, significant progress over the average of 0.8% achieved in the three previous quarters. The improvement, although helped by a weak comparative quarter last year and some purchasing brought forward by foot and mouth, was nevertheless very encouraging. It reflects the benefits of our customer promotional programme, our quality campaign and the impact of the initial programme of store extensions and refurbishments. Like-for-like sales growth for the full year was 1.7% (excluding petrol), a substantial improvement on the 2.5% decline recorded in the previous financial year.


Shaw’s recorded total sales growth for the quarter of 3.2%, which included a three-week contribution from the 19 Grand Union stores acquired in March. Like-for-like sales grew by 2.5%, well ahead of the average of 0.7% achieved in the three previous quarters. This improvement reflects the impact of remodelled stores and a small weather benefit.

In November we initiated a strategic review of options for reducing our exposure to Egypt. This was in line with our objective of refocusing the Group’s activities, and a growing concern over the level of our investment, initiated in March 1999 and substantially increased in October 1999. We have completed this review and concluded that we should if possible withdraw from the market in Egypt, and avoid substantial further investment of managerial and financial resources. This is best achieved by the sale of our interest to our minority partner, and we have reached a preliminary agreement with him. This transaction is subject to regulatory approvals in Egypt. This will result in an exceptional loss of between £100 and £125 million in our year-end accounts to 31 March 2001.


The costs associated with our withdrawal from Egypt are clearly disappointing, but along with the successful disposal of Homebase in March, it allows us to focus the Group’s operations around food retailing and related activities in the UK and US.


Further progress in realising value from the Homebase sale has been made with the agreed sale of 22 freehold properties to British Land, for a total consideration of £156 million. These formed part of the portfolio of 46 properties and land holdings transferred to Sainsbury’s by Homebase at the time of the sale to Schroder Ventures, and this transaction brings the total cash and loan note proceeds from the Homebase disposal to £866 million. The sale of these properties realised a profit of £45 million, in line with our original expectations and part of the estimated total profit on the Homebase disposal of £105 million.


We expect to achieve our previously stated aim of stabilising underlying Group profit before tax* and e-commerce for the year to 31 March 2001. We experienced weaker trading by Homebase during the sale process, and higher than expected second half losses in Egypt. However all our continuing operations performed well. Sainsbury’s Supermarkets second-half profits will be higher than last year, and will exceed our budget for the first time for some years. Shaw’s, JS Developments and Sainsbury’s Bank all performed well.


During the year encouraging progress has been made in Sainsbury’s Supermarkets. We are driving forward the key strategic programmes – replatforming our systems, modernising our supply chain, and reinvigorating our stores, together with the streamlining of our operations to deliver cost efficiencies. We look forward to providing full details with the preliminary results on 30 May.”


 

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


Sainsbury’s Supermarkets

(Unaudited)





































     
  Excluding Petrol Including Petrol
  Q4 FY Q4 FY
Like-for-like sales growth % * 4.8 1.7 3.8 2.3
Net new space added % 2.1 2.2 2.2 2.4
 


Total sales growth % 6.9 3.9 6.0 4.7
 
Inflation was 0.6% for the quarter, and the same excluding petrol.
Adjusted for Easter, full year like-for-like growth was 2.1% (1.5% excluding petrol).
 
Shaw’s
(Unaudited)

























     
  Q4 FY
Like-for-like sales growth % * 2.5 1.4
Net new space added % 0.7 4.0
 


Total sales growth % 3.2 5.4