J Sainsbury (SBRY) H2 24/25 earnings summary

Executive summary

• Achieved 4.2% total sales growth (excluding fuel) and 7.2% increase in retail underlying operating profit year-over-year for FY24/25.

• Grocery volume growth outpaced the market, with record customer satisfaction and the largest market share gains in over a decade.

• Continued investment in technology, automation, and infrastructure, including the largest store expansion in over a decade.

• Delivered £349 million in cost savings in the first year of the three-year £1 billion program.

• Enhanced shareholder returns through dividends, a £200 million share buyback, and a planned £250 million special dividend from bank disposal proceeds.

Financial highlights

• Total retail sales (excluding fuel) rose 3.1% to £31,555m; grocery sales up 4.5%, Argos sales down 2.7%.

• Retail underlying operating profit increased 7.2% to £1,036m; retail underlying EBITDA margin improved by 24bps to 6.72%.

• Underlying profit before tax up 8.6% to £761m; underlying basic EPS up 4.5% to 23.1p.

• Retail free cash flow was £531 million, down year-over-year due to lower working capital inflows and higher tax payments.

• Dividend per share increased to 13.6p; £200m share buyback completed.

Outlook and guidance

• Targeting retail underlying operating profit of around £1 billion and financial services profit of around £10 million for FY25/26.

• Expecting over £500 million retail free cash flow and core retail capex of £800–£850 million in FY25/26.

• Plan to open 15 supermarkets and 25 convenience stores, with net space impact of +0.5% on sales.

• Special dividend of £250 million from bank disposal proceeds in H2 FY25/26, with potential for enhanced buyback.

• Maintaining leverage target of net debt/EBITDA between 2.4x and 3.0x.