Sainsbury's - Slides that matter
1 May 2019
PDF - Sainsbury's - Slides that matter
Note this commentary and analysis appeared in one form via Twitter, so it made sense to convert to PDF and share on here.
So for Sainsbury's - the results felt like someone was missing from the party (namely Walmart and Roger Burnley of Asda).
However the CMA have made their decision and it's clear that Sainsbury's didn't agree, nor did Walmart but one suspects they're generally ok with what will occur and they have a business that is performing well despite distractions, a tough market and the discount growth.
In terms of Sainsbury's - the capital markets day in September looks like their chance to showcase new strategy, thoughts, progression on refits and the like that are detailed in the presentation slides today.
It also gives them chance to formulate some form of new strategy as many of the pillars they delivered against today were set in 2015, the wider strategy is from that time too.
No ambition / number / target was made around cost saving either notably, clearly those synergies they hoped for will now never come, so it's a tough gig for the chairman and the exec board, alongside Mike Coupe to formulate a plan that is compelling in the market and for investors.
Especially as the numbers weren't bowling anyone over, sure they were acceptable, profit growth, beat targets on Argos and done all they needed to with that business.
However the wider numbers around like for like were not great, the groceries business was flagging despite the 2nd half of the year containing big seasonal events. The like for like numbers include VAT (unlike anyone else) and also include Argos who will levy a fair amount of VAT on their vast majority of their goods.
General merchandise flags but the defence here is the reduced range in Sainsbury's stores, but the sales don't necessarily transfer to Argos which is a concern, especially if the Argos growth (c. 45% in 3 years for Argos stores that were dropped in to a Sainsbury's store) is in low margin electricals and gaming etc.
The halo of sales that Sainsbury's used to get from the in store Argos also doesn't appear to be continuing given the slowdown in Groceries, one would expect a marked increase given the rate of sales rising in the in store Argos......
There's a lot in the pot, Sainsbury's pointed to better standards (from a low, low base and one that was entirely self inflicted) but this was a limited timeframe and via their own 'feedback survey' which relies on customers feeding back via an app....
There is no mystery customer measure (the cornerstone of any business) as this was changed alongside the restructure. The wrong move, the right move would be to face in to the changes with the same measure of assessment.
Otherwise what is progress?
As Archie Norman says "The genesis of any turnaround starts with the unvarnished truth". It's so fundamental that it almost doesn't need mentioning.
That's retail though, all about the basics, doing those well. Filling the shops, staffing the checkouts, good price, good quality.
Not rocket science.
PDF - Sainsbury's - Slides that matter
From the Grocery Insight newsletter archive, first sent to subscribers on 1 May 2019. Steve now writes at read.groceryinsight.com. See also the blog archive and briefings.