Sainsbury’s Food Business ‘Firing on All Cylinders’

Sainsbury (LON: SBRY) shares dipped over 1% in early Thursday trading after the supermarket giant reported its final results for the 52 weeks ended March 2, 2024, which saw revenue rise year-on-year.

The well-known supermarket chain reported revenue of £32.7 billion, with group sales coming in at £36.34 billion. The company's revenue was boosted by grocery sales, which grew 9.4%. Meanwhile, general merchandise sales rose 1.2%, clothing sales fell 6.4%, and fuel sales declined by 14.3%, reflecting lower input prices. 

“Our food business is firing on all cylinders,” said Simon Roberts, Chief Executive of J Sainsbury. “We have the best combination of value and quality in the market and that's winning us customers from all our key competitors, driving consistent volume market share growth as more customers choose us for their weekly shop and all their special occasions.”

The food business has been helped by Sainsbury's “relentlessly investing in price; £780 million over the past three years.”

Sainsbury's underlying profit before tax came in at £701 million, up 1.6% year-on-year. However, its statutory profit before tax of £277 million declined by 15.3%, predominantly relating to the company's decision to wind down its banking unit.

Retail free cashflow was £639 million, broadly flat year-on-year. Sainsbury's proposed a final dividend of 9.2 pence, putting its full-year dividend at 13.1 pence, in line with last year.

Looking forward, SBRY is confident it can deliver strong profit growth in the year ahead. It expects to continue to grow grocery volumes ahead of the market and sees retail underlying operating profit between £1.01 billion and £1.06 billion, representing growth of between 5% and 10%.

“Our strong grocery momentum has continued into the new financial year and while we will face tougher comparatives, we expect to continue to generate volume growth and outperform the market,” said Sainsbury's. “Against last year's cool and wet Summer, we additionally expect a sales benefit across the business from more normal seasonal weather.”

Following the report, analysts at Shore Capital said Sainsbury reported “another year of very good core progress” and is a “fundamentally stronger business.”