# J Sainsbury deliver a strong Q3 and Christmas performance

- Link: https://www.directorstalkinterviews.com/j-sainsbury-deliver-a-strong-q3-and-christmas-performance/412951681
- Published: 2021-01-07T07:24:47+00:00
- Author: Amilia Stone

**[J Sainsbury plc](https://www.directorstalkinterviews.com/ftse-company/j-sainsbury/sbry.l)**(
LON:SBRY) has announced its third quarter trading statement for the 15 weeks to 
2 January 2021.

·     Christmas like-for-like sales up 9.3 per cent^(1)

·     Q3 like-for-like sales up 8.6 per cent (excl. fuel), with total retail sales
up 6.8 per cent (excl. fuel)

·     Grocery sales grew 7.4 per cent, with Groceries Online up 128 per cent

·     General Merchandise sales grew by 6.0 per cent, with Argos sales up 8.4 per
cent

·     Clothing sales grew by 0.4 per cent

·     Total digital sales grew by 81 per cent, 44 per cent of total sales

·    We now expect, after forgoing business rates relief of £410 million, to report
underlying profit before tax  (UPBT) of at least £330 million in the financial year
to March 2021 (financial year to March 2020: £586 million)

**Outlook**

Grocery, General Merchandise and Clothing sales were stronger than our expectations
throughout the quarter and particularly since the start of England’s second national
lockdown and subsequent increased restrictions throughout the UK. General Merchandise
and Clothing gross margins additionally benefited from better than anticipated full
price sales, driven by customers shopping earlier for Christmas and successful changes
to our Black Friday trading strategy.

The impact of the pandemic on sales, colleagues and costs adds additional uncertainty
to our financial outlook for the remainder of the year. However, after forgoing 
business rates relief of £410 million^(2) we now expect to report underlying profit
before tax (UPBT) of at least £330 million in the financial year to March 2021 (
financial year to March 2020: £586 million).

**Strategic and operational highlights**

We published a Strategy Update with our Interim Results in November, focused on 
putting food back at the heart of Sainsbury’s and are making encouraging progress
towards this:

**Food First**

·    We delivered strong food sales through the quarter. Basket sizes increased 
as customers bought more of their shopping from Sainsbury’s and we grew our Food
market share

·    We continue to lower prices on the products that matter most to customers, 
with a particular focus on fresh foods. Last week we launched our biggest ever Price
Lock, covering over 2,500 products

·    Colleagues delivered excellent customer service throughout the key Christmas
weeks and customers felt safe shopping with us. Scores in availability and friendliness
of colleagues improved by 10 percentage points and six percentage points respectively
year-on-year

·      We are focused on offering exciting new products and bringing them to our
customers faster. Christmas innovations this year included _Taste the Difference_
_Pink Prawn Roses,_ _Pigs in Blankets Christmas Tree_ and flavoured spirits such
as _Taste the Difference_ _Blackfriars Winterberry & Clementine Gin_

·    _Taste the Difference _performed well over the quarter, with sales up more 
than 11 per cent and we launched over 60 new _Taste the Difference_ Christmas products.
Our meat-free range Plant Pioneers also outperformed the market and customers bought
more of our vegan centrepieces such as our _No Turkey Parcels_ and our _No Beef 
Wellington_

·    Groceries Online sales grew by 128 per cent year-on-year, accounting for 18
per cent of grocery sales. We have more than doubled the number of slots we can 
offer for home delivery and Click & Collect; Click & Collect accounted for 24 per
cent of online sales in the key Christmas week. We have further increased the productivity
of our online operation: as we build order capacity from broadly the same fixed 
asset base, orders per van continue to increase and pick rates have returned to 
pre-COVID levels

·    SmartShop self-scan accounted for 28 per cent of sales in stores with handsets,
leading to strong customer satisfaction scores in ease and speed of checkout

·    We continue to invest to have the right stores in the right locations for customers.
We opened six new stores in the quarter, including two new Neighbourhood Hub stores
in Bishop’s Waltham and Midhurst

**Brands that Deliver**

·    Argos sales grew by over eight per cent in the quarter, with nearly 90 per 
cent of sales starting online and Fast Track delivery grew by 62 per cent

·    Argos growth was driven by a strong performance across a wide variety of categories,
with particularly good growth in Christmas gifting, gaming consoles and TVs. This
was despite a Black Friday performance which reflected a continued reduction in 
promotional activity in favour of lower everyday prices

·    Tu Clothing has grown market share in both value and volume, with strong online
growth

·    6.4 million people are now using digital Nectar and Nectar participation at
Argos remains ahead of expectations

·    Financial Services recovered from first half losses to book a profit in the
third quarter. We continue to expect to deliver an underlying profit in the second
half of the financial year to March 2021, driven by savings pricing, benefits from
cost actions and some cautious rebuilding of lending volumes. The balance sheet 
remains strong with capital buffers exceeding levels reported at our Interim Results
in November. Levels of arrears are lower than expected

_^(1 )Total retail (exc. Fuel) like-for-like sales, 9 weeks from 1 November 2020
to 2 Jan 2021._

_^(2 )The timing and mechanic by which we will forgo business rates relief is still
to be determined but we expect to recognise the forgoing of £410 million business
rates relief relating to the financial year to March 2021 to UPBT in this financial
year (to March 2021)._

> **Simon Roberts, Chief Executive of J Sainsbury plc, said: **“As we enter our 
> third phase of tighter restrictions and national lockdowns, my number one priority
> remains keeping our colleagues and customers safe. The last few months have been
> really tough for many people and we are all dealing with a lot of change and uncertainty
> again. Given these challenging circumstances, we really focused on doing the best
> possible job for our customers this Christmas. I would like to say a huge thank
> you to every one of my colleagues, including the 68,000 colleagues we have recruited
> into Sainsbury’s and Argos since March, for the outstanding service you gave our
> customers.
> “We made a strong start to delivering our Food First plan and we are also clear
> on the opportunities to further improve our offer as we look ahead for 2021. At
> Christmas we focused on offering our customers great prices, great quality and
> great service and I feel really proud that Sainsbury’s customer satisfaction scores
> were the highest ever in the key Christmas week. We have started the new year 
> with a strong value offer, with Price Lock currently on over 2,500 everyday products.
> “Many customers had to change their Christmas plans at the last minute and we 
> sold smaller turkeys and more lamb and beef than normal. While people had smaller
> gatherings, they still treated themselves, with _Taste the Difference_ sales up
> 11 per cent. Premium champagne sales were up 52 per cent, _Taste the Difference_
> party food was popular throughout December and people did more home baking than
> usual with mincemeat sales up 24 per cent. Customers still wanted New Year’s Eve
> at home to feel special and we sold a record number of steaks.
> “More customers bought their food online than ever before and we delivered 1.1
> million orders in the ten days to Christmas, double the number of last year. Argos
> sales were up over eight per cent with Fast Track home delivery and Click & Collect
> beating expectations for Black Friday and Christmas.
> “We are delighted that our ‘Help Brighten a Million Christmases’ campaign raised
> £6 million in just two weeks for over 800 local charitable partners as well as
> Comic Relief and FareShare. We are also creating another £1 million local community
> fund for all our stores to donate to charities and other good causes in their 
> local area and we are continuing to support the government’s free school meal 
> vouchers scheme.
>  “We remain focused on delivering the plan we outlined in November and look forward
> to providing a further update on early progress at our Preliminary Results in 
> April.”

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