In This Article:
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Revenue Growth: Sainsbury's sales grew 4.6% in the first half, with grocery growth of 5%.
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Operating Profit: H1 operating profit increased by 3.7% year-on-year to GBP503 million.
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Profit Contribution: Sainsbury's profit contribution grew by 8.7%, with margin up 20 basis points year-on-year.
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Argos Sales Decline: Argos sales declined by 5.5% in the first half.
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Financial Services Profit: Underlying operating profit grew by 38% to GBP18 million.
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Underlying Profit Before Tax: Grew by 4.7% in the first half.
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Basic Earnings Per Share: Increased by 1.9% to 10.7p.
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Retail Free Cash Flow: GBP425 million, down year-on-year.
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Net Debt Reduction: Net debt excluding leases reduced by GBP79 million versus H1 last year.
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Interim Dividend: Unchanged at 3.9p per share.
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Share Buyback Program: GBP150 million completed, with an additional GBP50 million planned for the second half.
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Store Expansion: Acquisition of 11 Homebase stores and two Co-op stores, with plans to open around 20 new supermarkets by March 2026.
Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Sainsbury (J) PLC (JSAIY) reported a strong profit contribution growth of 8.7% in its food business, outpacing sales growth.
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The company achieved significant market share gains in the grocery sector, with a notable increase in big basket primary customers.
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Sainsbury (J) PLC (JSAIY) has successfully improved customer perception of value, with an 8.5% year-on-year increase.
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The company is expanding its supermarket coverage by acquiring 11 Homebase stores and two Co-op stores, aiming for high returns.
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Sainsbury (J) PLC (JSAIY) is on track to deliver GBP1 billion in cost savings over the next three years, supporting its growth and efficiency.
Negative Points
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Argos experienced a challenging first quarter with a 5.5% decline in sales, impacting overall profit growth.
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The company faces significant cost pressures from increased national insurance contributions, estimated at GBP140 million.
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Sainsbury (J) PLC (JSAIY) anticipates inflationary pressures due to rising labor costs, which may affect pricing strategies.
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The financial services division incurred GBP225 million in non-underlying costs related to its phased withdrawal from core banking activities.
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The company is dealing with increased lease liabilities due to the acquisition of Homebase stores, affecting net debt levels.
Q & A Highlights
Q: Can you explain the impact of regulatory changes on Argos' online traffic in the first quarter and how you improved performance in the second quarter? A: Simon Roberts, CEO: The regulatory changes restricting third-party cookies affected our ability to track and market to customers, impacting online traffic volumes. However, as we moved into the second quarter, we saw a recovery in online trends and market share, driven by improved traffic and volume trends. We expect a more resilient performance from Argos in the second half, especially during peak trading periods like Black Friday and Christmas.