Sainsbury(J) PLC
9 April 2001
Sainsbury trading update for the 12 weeks ended 31 March 2001
Sainsbury's Supermarkets sales up 6.9%, with like-for-like sales growth of
4.8% (excluding petrol).
Shaw's sales up 3.2%, with like-for-like sales growth of 2.5%.
Preliminary agreement reached to sell Group's interests in Egypt, resulting
in an exceptional loss of between £100 and £125 million.
Sale of 22 Homebase properties agreed for £156 million
Objective to stabilise underlying Group profit before tax* and e-commerce
for the year to 31 March 2001 expected to be achieved.
Sir Peter Davis, Group Chief Executive, said :
'Last year our priorities for the Group were to reverse the decline in
profitability in the UK supermarkets business, to stabilise underlying Group
profits before tax* and e-commerce, and to focus our activities around food
retailing and related activities in the UK and US. At the end of the fourth
quarter we can report real achievements in each of these areas.
During the fourth quarter Sainsbury's Supermarkets recorded total sales
growth, excluding petrol, of 6.9%. Like-for-like sales, again excluding
petrol, increased by 4.8%, significant progress over the average of 0.8%
achieved in the three previous quarters. The improvement, although helped by
a weak comparative quarter last year and some purchasing brought forward by
foot and mouth, was nevertheless very encouraging. It reflects the benefits
of our customer promotional programme, our quality campaign and the impact of
the initial programme of store extensions and refurbishments. Like-for-like
sales growth for the full year was 1.7% (excluding petrol), a substantial
improvement on the 2.5% decline recorded in the previous financial year.
Shaw's recorded total sales growth for the quarter of 3.2%, which included a
three-week contribution from the 19 Grand Union stores acquired in March.
Like-for-like sales grew by 2.5%, well ahead of the average of 0.7% achieved
in the three previous quarters. This improvement reflects the impact of
remodelled stores and a small weather benefit.
In November we initiated a strategic review of options for reducing our
exposure to Egypt. This was in line with our objective of refocusing the
Group's activities, and a growing concern over the level of our investment,
initiated in March 1999 and substantially increased in October 1999. We have
completed this review and concluded that we should if possible withdraw from
the market in Egypt, and avoid substantial further investment of managerial
and financial resources. This is best achieved by the sale of our interest to
our minority partner, and we have reached a preliminary agreement with him.
This transaction is subject to regulatory approvals in Egypt. This will
result in an exceptional loss of between £100 and £125 million in our year-end
accounts to 31 March 2001.
The costs associated with our withdrawal from Egypt are clearly disappointing,
but along with the successful disposal of Homebase in March, it allows us to
focus the Group's operations around food retailing and related activities in
the UK and US.
Further progress in realising value from the Homebase sale has been made with
the agreed sale of 22 freehold properties to British Land, for a total
consideration of £156 million. These formed part of the portfolio of 46
properties and land holdings transferred to Sainsbury's by Homebase at the
time of the sale to Schroder Ventures, and this transaction brings the total
cash and loan note proceeds from the Homebase disposal to £866 million. The
sale of these properties realised a profit of £45 million, in line with our
original expectations and part of the estimated total profit on the Homebase
disposal of £105 million.
We expect to achieve our previously stated aim of stabilising underlying Group
profit before tax* and e-commerce for the year to 31 March 2001. We
experienced weaker trading by Homebase during the sale process, and higher
than expected second half losses in Egypt. However all our continuing
operations performed well. Sainsbury's Supermarkets second-half profits will
be higher than last year, and will exceed our budget for the first time for
some years. Shaw's, JS Developments and Sainsbury's Bank all performed well.
During the year encouraging progress has been made in Sainsbury's
Supermarkets. We are driving forward the key strategic programmes -
replatforming our systems, modernising our supply chain, and reinvigorating
our stores, together with the streamlining of our operations to deliver cost
efficiencies. We look forward to providing full details at the results
presentation on 30 May.'
* Before amortisation of goodwill, exceptional costs and non-operating items
Sainsbury's Supermarkets
(Unaudited)
Excluding petrol Including petrol
Q4 FY Q4 FY
Like-for-like sales growth % 4.8 1.7 3.8 2.3
Net new space added % 2.1 2.2 2.2 2.4
Total sales growth % 6.9 3.9 6.0 4.7
Inflation was 0.6% for the quarter, and the same excluding petrol.
Adjusted for Easter, full year like-for-like growth was 2.1% (1.5% excluding
petrol).
Shaw's
(Unaudited)
Q4 FY
Like-for-like sales growth % 2.5 1.4
Net new space added % 0.7 4.0
Total sales growth % 3.2 5.4
For enquires:
Investor Relations Roger Matthews/David Boyd - 020 7695 6215
Media Pip Wood/Mandy Pursey - 020 7695 6329
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Does not distribute, republish or otherwise provide any information or derived works to any third party in any manner or use or process information or derived works for any commercial purposes.
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