Despite much of the focus on the failed merger, Sainsbury’s delivers an impressive set of results addressing many of the key concerns that have led to the negative sentiment and exceeding expectations.
Cost efficiencies are finally rewarding investors – 8% per cent hike in profits and dividend whilst strong cash flows is strengthening the balance sheet with debt reduced by £220m and a new commitment to reduce debt further by £600 million.
The share price is up 5% – reversing the decline from the merger blockage last Thursday.
Highlights:
- Group sales up 2.1% FY19 – growth across all channels
- Supermarket + 1%
- Convenience +3.7%
- Online + 6.9 %
- Store pick online fulfilment = same day delivery to over 50% of UK – up 20% over FY18
- Argos in supermarkets delivering
- Sales +2.2%, plus £160 million in cost synergies
- Third most visited website in the UK
- Supermarkets with Argos growing faster
- Balance sheet stronger with debt lower by +£220m – Targeting £600m over 3Ys
- Total profits up 8% and dividend up 8% per cent
- Strong free cash flow
- Dividend cash cover of 2.1 times
- Accelerating investment in store estate and technology
