J Sainsbury (SBRY) Q1 24/25 TU earnings summary

Executive summary

• Delivered strong grocery volume growth for the second consecutive year, achieving the largest market share gains among UK grocers and driving customer switching for main shop baskets.

• Premium own-label (Taste the Difference) sales grew 14%, with high single-digit participation in grocery sales and remaining the fastest-growing premium label.

• General Merchandise and Clothing sales declined 4.3%, and Argos sales fell 6.2% year-over-year, impacted by tough comparatives, unseasonal weather, and weaker consumer electronics demand.

• Clothing momentum improved, especially in womenswear, due to better ranges and availability.

• Launched a £200 million share buyback and expect to return at least £250 million to shareholders after the Sainsbury's Bank sale.

Financial highlights

• Full-year retail underlying operating profit guidance maintained at GBP 1,010–1,060 million, representing 5–10% growth year-over-year.

• Grocery sales grew 4.8% year-over-year, with like-for-like sales up 3.0% excluding fuel for Q1 2024/25.

• General Merchandise and Clothing sales declined 4.3%; Argos down 6.2% year-over-year.

• Total retail sales (excluding fuel) rose 2.6% year-over-year; including fuel, up 2.3%.

• Taste the Difference own brand grew 14% and remains the fastest-growing premium label.

Outlook and guidance

• Guidance range reaffirmed, with strong grocery momentum offsetting softer Argos performance and late summer start.

• Reaffirmed FY24/25 retail underlying operating profit guidance of £1,010–1,060 million, representing 5–10% growth versus FY23/24.

• Expect to generate at least £500 million in retail free cash flow for the year.

• Space rotation program in 180 stores to shift space from general merchandise to food will drive future growth, with most impact expected next year.

• Capital return of at least GBP 250 million expected in late 2025/early 2026 following Sainsbury's Bank sale, with form of return to be decided.