7th Oct 2005 07:00
Sainsbury(J) PLC07 October 2005 7 October 2005 Pre-Close Second Quarter Trading Statement for 16 weeks to 8 October 2005 J Sainsbury plc today reports its pre-close second quarter trading statement,comprising 15 weeks actual sales and estimated sales for the final week to 8October 2005. Highlights • Total sales for second quarter up 6.6 percent (5.4 percent excluding petrol) • Like-for-like sales for second quarter up 4.1 percent (2.8 percent excluding petrol) • Third consecutive quarter of like-for-like sales growth since recovery plan announced in October 2004 • Customers benefiting from continuing improvement in product availability and price position • Steady growth in market share this year • Further challenges for Sainsbury's Bank in a tough market Trading Justin King, chief executive, said: "Trading during the second quarter hascontinued the good progress made in the first 12 weeks of the year.Like-for-like sales (excluding petrol) of 2.8 percent reflect a good salesperformance during a challenging period for the retail sector and we have grownour market share. Our plans for the recovery of our business are on track. "There was 1.7 percent deflation in grocery, driven by our continued investmentin the customer offer. Strong inflation in petrol resulted in total inflationof 0.9 percent for the quarter. As previously stated we will continue toinvest in both price and quality and in our store execution to improve ourcustomer offer. Our sales momentum supports this investment as well as theexternal cost pressures which are generally being reported by retailers. "We continue to invest in developing Sainsbury's Bank and to move to morecommission based products. Customer numbers grew by 18% and there has beengrowth in assets and income. However consumer confidence has weakened andmarket conditions continue to be challenging. We have increased the level ofprovisioning for bad and doubtful debts relating to business undertaken inprevious years and as a result expect the Bank to report a small loss in thefirst half of this year. "Looking forward we expect the market to remain highly competitive for the restof the year but our priority remains to invest in the customer offer to maintainmarket levels of sales growth. As previously stated we believe the benefits ofthe operational gearing in the business will begin to be delivered in the secondhalf of 2006/07. We need to make sure that progress is sustained and consistentacross all our stores and that work we are undertaking 'behind the scenes'delivers the improvements laid out in our plans to Make Sainsbury's Great Again. Making Sainsbury's Great Again "As we outlined last October, fixing the basics of our customer offer is ourpriority in this first year of our recovery plan. We are pleased that sales aregrowing as a result of the work undertaken to date and independent industrymeasures have reported our market share to be growing since the beginning of theyear (4). "Encouraging current customers to complete more of their weekly shop with usagain is key to reaching our sales growth target but we also believe lapsed andnew customers will be attracted by the progress we have made. Over the last yearwe have invested in thousands of price reductions and we believe we now haveindustry-matching availability. At the same time we have given similar priorityto product quality and introduced new and improved ranges. We will continue torespond as necessary to ensure our offer remains competitive. "An important event during the quarter has been the re-launch of our brandsupported by our Try Something New Today advertising campaign. This marks thenext stage of our recovery plan and has also kick-started a change in the way wework which is essential if we are to sustain our early progress. The advertisingcampaign builds on Sainsbury's heritage of quality and value and the initialcustomer reaction has been pleasing. "Our brand links well with the promotion of healthy, fresh and tasty food and anactive and healthy lifestyle. We are now delivering orders of over £17 millionof sports equipment and experiences to more than 25,000 schools as part of our 'Active Kids' programme. The scheme was a phenomenal success with over 80% ofall UK schools participating. As part of 'Active Kids' and our commitment toencourage children to be more active we pledged £500,000 to the Youth SportTrust. This will help provide training for teachers to lead more exerciseactivities in school. We have also just signed a grass-roots programme with theEnglish Schools Athletics Association which we hope will go some way to helpingsecure England's hopes for its youngest Olympic athletes in 2012. "Overall we know that our customers are noticing the difference in our stores,particularly in pricing, availability and service, but there is still much todo. Our commitment to constantly improve the shopping experience and do theright thing for our customers remains at the heart of all our activities." Notes (1) For guidance, the accounts for the 28 weeks to 9 October 2004 have been restated under IFRS. On this basis, underlying profits for the 28 weeks to 9 October 2004 were £119 million. Details are provided on our website at http://www.j-sainsbury.co.uk/files/results/q2ts05/ifrs.pdf. (2) The definition of underlying profits adopted is "Profit from continuing operations before gain or loss on the sale of properties and businesses, impairment of goodwill, financing fair value movements and items that are material and infrequent in nature, such as costs arising from the closure, relocation or re-structuring of a significant operation". As previously reported, we have taken an exemption under IFRS 1 to defer the implementation of IAS 32 and 39 to the financial year ending 25 March 2006. The figures presented for the 28 weeks to 9 October 2004, have not, therefore, been adjusted to reflect IAS 32 and 39. Details of the IAS 32 and 39 adjustments will be provided when the interim results for 28 weeks to 8 October 2005 are reported. (3) Interims results for the 28 weeks to 8 October 2005 will be reported, under IFRS, on 16 November 2005. (4) As measured by TNS on a 12 weekly basis compared with the previous year since January 2005 (5) Sales growth is detailed below: 2005/06 Q1 Q2 H1 Sales growth including petrol (%) Total 5.7 6.6 6.2 Lfl 1.9 4.1 3.1 Sales growth excluding petrol (%) Total 5.3 5.4 5.3 Lfl 1.3 2.8 2.1 (6) We will be holding a conference call for analysts and investors at 9:00 (BST). To listen to the audio webcast: please visit www.j-sainsbury.co.uk from 8:30 BST and follow the on-screen instructions. The archive of this event will be available from 12:00 BST on the day in the form of a delayed webcast. Enquiries: Investor Relations Media Lynda Ashton Pip Wood+44 (0) 20 7695 7162 +44 (0) 20 7695 7295 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Sainsbury's