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Sainsbury's reported its Q1 2025 earnings, showcasing a solid performance with gross sales growth of 4.4% and a notable 5% increase in grocery sales. The company maintained its guidance for a £1 billion retail operating profit, emphasizing a stronger performance expected in the second half of the year. Sainsbury's stock has shown resilience, with a slight increase of 0.44% in the latest trading session.
Key Takeaways
- Gross sales grew by 4.4%, with grocery sales up 5%.
- The company maintained its £1 billion retail operating profit guidance.
- Sainsbury's stock price rose by 0.44% following the earnings announcement.
- The company launched 250 new Taste the Difference products, boosting sales by 18%.
Company Performance
Sainsbury's demonstrated robust performance in Q1 2025, with gross sales increasing by 4.4%. The grocery segment showed resilience with a 5% sales increase, despite challenging market conditions. The company continues to focus on premium product ranges, as evidenced by the 18% sales growth in its Taste the Difference line. Sainsbury's has also opened new convenience stores and supermarkets, enhancing its market presence.
Financial Highlights
- Revenue: 17.58 billion USD
- Gross sales growth: 4.4%
- Grocery sales growth: 5%
- Taste the Difference sales growth: 18%
Outlook & Guidance
Sainsbury's is optimistic about its future performance, maintaining its £1 billion retail operating profit guidance. The company expects profits to be more weighted towards the second half of the year. Sainsbury's is also focusing on value, quality, innovation, and service to navigate the competitive landscape. The company is preparing for potential seasonal sales opportunities, anticipating favorable weather conditions.
Executive Commentary
Simon Roberts, CEO of Sainsbury's, highlighted the company's strong market position, stating, "We are growing volumes faster than the market for our third consecutive year." He also emphasized the potential of the Nectar 360 Pollen platform, saying, "Pollen will be a game changer in terms of how easily brands and agencies can access the full potential of our retail media network."
Risks and Challenges
- Competitive Market: The grocery market remains highly competitive, requiring continuous investment in pricing and promotions.
- Inflationary Pressures: Ongoing inflation could impact consumer spending and profit margins.
- General Merchandise: This segment remains subdued, potentially affecting overall sales growth.
- Market Saturation: The opening of new stores could lead to market saturation in certain areas.
Q&A
During the earnings call, analysts inquired about the growth strategy for the Taste the Difference line, the performance of Argos, and the capabilities of the Nectar 360 Pollen platform. The company addressed concerns about stock levels and market competitiveness, assuring analysts of its strategic initiatives to maintain market leadership.
Full transcript - J Sainsbury PLC (SBRY) Q1 2026:
Simon Roberts, CEO, Sainsbury's: Thank you. A very good morning, everybody, and welcome to our first quarter trading statement covering the 16 weeks to the 21st of June. I'm going to talk briefly about our trading performance, and then, of course, Bláthnaid and I will be very happy to take all the questions. I want to start here with a slide that you may remember we shared at our prelims results back at the end of April. These are the priorities that we set out with the clear intention to focus and energize all of our team across the business to accelerate into the year ahead and deliver the next phase of our growth. Now, 16 weeks into the new financial year, the results we've issued this morning demonstrate the strong trading momentum we are driving across all of our brands.
We're doing exactly what we committed to do: sustaining the strength of our competitive position in grocery and growing market share. In fact, we've built further on our strong competitive position during the quarter, improving our prices against all competitors and consistently delivering our winning combination of value, quality, availability, and service. As a result, our food business continues to go from strength to strength. We're growing volumes faster than the market for our third consecutive year, and we've achieved our highest market share since 2016. We're making good progress with our plan to bring the best of our food offer to more customers, with seven new convenience stores and two new supermarkets opened during the quarter.
Now, if you've been into our stores or shopped online recently, you'll have seen that we're going further and faster with our plan to deliver leading product innovation, particularly through Taste the Difference, and our customers are really buying into this. At the same time, we're scaling our personalized loyalty program to fully optimize how we deliver even more great value through Nectar Prices. All of this is underpinned by the investments we're making in technology to drive efficiency, enhance our platform for growth, and support the delivery of our GBP 1 billion cost-saving target. This is a vital point of difference for us as we continue to strengthen the competitive advantage we've built. Today, we've reiterated our four-year guidance of around GBP 1 billion of retail operating profit and at least GBP 500 million of retail free cash flow.
As we discussed at the prelims in April, this guidance allows us to continue to make balanced choices and provides the capacity to navigate the environment around us as we travel through the year ahead and deliver on our next-level Sainsbury's commitments. Turning now to our sales performance for the quarter, we continue to drive strong momentum in grocery, growing sales by 5% against a particularly tough comparative. On a two-year basis, grocery sales were up 10%. We delivered good volume growth, with a slightly higher rate of inflation coming through across the industry as we saw increased cost pressure on our cost bases and those of our suppliers. Our gross sales grew by 4.4% ahead of a subdued general merchandise market, helped by warm and dry spring weather and against a weak comparative.
Now, you can see here the strength of our grocery business, outperforming the market again this quarter and ahead of our key competitors. If you look at the chart on the right-hand side of this slide, you can see clearly that we are delivering this sustained volume growth against a tough comparative with very strong two-year outperformance. We are consistently delivering on our winning combination of value, quality, availability, and service. This drives our confidence in maintaining this momentum, and we expect to continue to grow grocery volumes ahead of the market this year. We all know there has been a lot of noise in the market in recent months, and there are a number of moving parts in the mix. Across the market, everyone has raised their game when it comes to delivering value for customers, and marketing activity has been ramping up to amplify key value messaging.
At the same time, operating cost inflation is working its way through the system. It is a very dynamic market at the moment. Within all the noise, we're very pleased with where we are and the momentum we have. Our value proposition is stronger than ever, and we have improved our price position against all competitors this quarter, as you can see. We're now offering customers even more opportunity to save on the items they buy most often, through the biggest Aldi Price Match commitment in the market on around 800 products and through Nectar Prices on over 9,000 products. It is clear that customers are really noticing. Our value-for-money customer satisfaction measures are now at the highest level they've ever been.
Taste the Difference has been at the center of our strategy to put good food back at the heart of Sainsbury's and our reinvigorated passion for innovation. It's a real point of difference for us, with a significantly higher proportion of our sales coming through premium private label than competitors. We are continuing to make bigger market share gains than any other retailer in this space. We are delivering another strong performance in Taste the Difference this summer, from really high-quality essentials like our Taste the Difference strawberries, perfect to enjoy as we come into the Wimbledon season, and exciting new innovations in our deli and picnic ranges, which have already been very popular with customers. We grew sales by 18% this quarter, which was on the back of two years of very strong growth.
In fresh food, we've grown Taste the Difference by almost 50% over the last three years. However customers want to shop with us, whether it's in our supermarkets, convenience stores, or online, our colleagues are totally focused and are doing a brilliant job in delivering the very best experience we can. Across all our channels this quarter, we've seen strong improvements in customer satisfaction, with standout scores for the availability of products, appealing promotions, and value for money. We're really proud of the service and experience we're now consistently delivering. Our customer satisfaction metrics are testament to the commitment and dedication of all of our colleagues and team. At the same time, our suppliers and farmers have also been doing the best job in ensuring we maintain the highest levels of supply service and availability.
You've heard me say before that to win in this industry, we have to show up across all these key components of value, quality, availability, and service day in, day out, consistently delivering on the things that matter most for customers. You can see on this slide that when we do that, we become the first choice of food for many more customers, who then choose Sainsbury's for their big trolley shops, as you can see on the right-hand side of this slide. This is the measure that is really key here. We have nearly 1 million more loyal primary customers than we had four years ago, a huge step on versus our key competitors over the same period of time.
Now, our Nectar loyalty program has been truly transformational for our grocery business, and Nectar Prices have been a key driver of the increase in customer perceptions of our value and of our primary customer growth. The strength of our loyalty platform powers Nectar 360, our market-leading loyalty customer insight and retail media business. Now, we recently announced that we're taking another big step forward with this, with the launch of Nectar 360 Pollen, the most advanced retail media platform of its kind in the U.K. Pollen will be a game changer in terms of how easily brands and agencies can access the full potential of our retail media network to run omnichannel campaigns and, importantly, be able to measure their effectiveness. Built in-house, Pollen seamlessly brings together all of our existing capabilities in one place, a single platform for audience insights, media planning, and activation and measurement.
It will set us apart in the client service that we can provide, delivering an enhanced experience that is quick and simple to use, and with market-leading measurement of performance available throughout. Now, we're really proud of what we're doing here with Pollen, and we're excited about its launch later this year. It will be a huge unlocker of our potential to go much further in this space, and we're extremely encouraged by the phenomenal response we've had from brands, agencies, and partners so far. Now, building on early progress in quarter four, we're pleased to have driven further improvements at Argos this quarter, delivering sales growth, traffic growth, and volume growth as we showed up well for customers, particularly when the weather was warmer and drier in comparison to a poor start to the summer last year.
We are making good progress too with our more Argos, more often strategy. We are well underway with the strategic choices we laid out in April, which are all about improving the digital journey, strengthening our value proposition, increasing our desirability and awareness of the ranges that we have at Argos, and further expanding our stop-loss ranges. However, of course, it is a challenging backdrop. The general merchandise market is highly competitive and remains subdued as customers continue to spend carefully on discretionary items. There has also been a big increase in activity from some of the global online retailers, refocusing their efforts and investment on the U.K., so it is a very competitive market. We are now facing into tougher sales comparatives in the second quarter as we are up against a period when we ran a lot of clearance activity last year.
We know there is a lot more to do here, and the team now leading Argos are very firmly focused on strengthening our fundamentals and delivering a stronger, sustained performance over time. In summary, we are really pleased with where we are at this point in the year as we deliver against the priorities that we set out for the year in April. We are also encouraged by the level of strategic and operational progress being achieved right across the business and with our strong and sustained momentum relative to the market. We are ready to continue building on this with a particularly strong plan this summer across value, quality, innovation, and service at both Sainsbury's and Argos. Our team is more joined up than ever, focused and connected. We are ready to seize the opportunities ahead as we prepare for the second half.
Thank you for listening, and we'll now hand over to Q&A.
Moderator/Operator: We will now go to Q&A. If you would like to ask a question, please use the raise hand feature at the bottom of your screen. Alternatively, if you have dialed in, please press star nine on your handset now. To keep things fair as possible, we ask that you only ask one question. If we get additional time, please rejoin the queue by re-raising your hand or pressing star nine, and we will try to get back to you. We will pause for a moment to allow questioners to enter the queue. The first question is from Manjari Dhar at RBC. Please unmute yourself and begin with your question.
Simon Roberts, CEO, Sainsbury's: Morning, Manjari.
Bláthnaid, CFO, Sainsbury's: Morning, Bláthnaid. Morning. Thank you for taking my question. I just had a question on Taste the Difference, if I may. I see that the growth has accelerated. It's obviously a strong performance. I just wondered if you could give some color on sort of how much you think that that acceleration is your own initiatives and how much are the factors in the market, consumer trends, other players, and how sustainable you think that high level of growth could be. Thank you.
Simon Roberts, CEO, Sainsbury's: Manjari, thank you. Look, I think a couple of things to say here. I mean, the first thing is, you know, when we launched Food First back in 2020, we made a very clear commitment at that time we were going to really power innovation at Sainsbury's, and we were going to really build our capabilities back then to make sure that we had the leading innovation in the market. What you can see now is four years on, five years on, just the year-on-year-on-year progress we're able to deliver. We've got a fantastic team working on product innovation and constantly scanning the world for the best products that we think our customers will love. What we can see this summer is another big step on in the innovation.
Now, the products that we've launched this year, 250 products for this summer in Taste the Difference, particularly in all the food for outdoor eating at summer, picnics, family gatherings, customers are loving them. What we're seeing is, therefore, we've grown Taste the Difference sales in fresh food in the quarter by 20%, 18% overall for Taste the Difference, and fresh food sales are up 50% over the last three years. A real step on in performance. We think there's a lot more to come here. We're really seeing customers are buying into this innovation, but at affordable prices, and that's one of the things that really stands Taste the Difference out from much of the competition that's out there. Great momentum, more definitely to come in this space.
I was looking at the plans for the rest of this year in terms of innovation as we go into autumn and Christmas, and there is really, really strong new thinking and new products coming our way. In terms of more broadly in the market, look, I think a lot of the market have come on board to really focus on premium. It is an area where customers spend more time at home, eat out less. That is clearly something that most retailers are focused on, but we really are seeing market-leading growth in this space, and it is something we intend to stay very focused on.
Bláthnaid, CFO, Sainsbury's: Great. Thank you.
Simon Roberts, CEO, Sainsbury's: Thank you.
Moderator/Operator: The next question is from Isabel de Sauder at Morgan Stanley. Please unmute yourself and begin with your question.
Bláthnaid, CFO, Sainsbury's: Hello, Isabel. Good morning.
Good morning. Thank you for taking my questions. I had a question on Argos. Could you give us some color on what the like-for-like or the sales growth would have been, excluding seasonal outdoor gardening sales for the quarter, so that we can understand what the weather impact was? As we go through the year, I guess, given that the weather happened earlier this year than it did last year, this could mean that there is less discounting on the market. On the flip side, you mentioned the market is very competitive. We have various data sources telling us that the consumer is slowing. Would your expectation be that all of these tailwinds from the weather, from dollar, what have you, may essentially get passed on to the consumer and the environment stays very competitive and deflationary for Argos?
Simon Roberts, CEO, Sainsbury's: Isabel, thank you. Look, shall I maybe try to give you some sense of how we're feeling about what's driving the performance in the first quarter, and then maybe Bláthnaid in terms of how we look at over the rest of the year? I think a couple of things to say here. I mean, as you've already said, the general merchandise market is intensely competitive and highly promotional, and we definitely expect that to continue. That being said, we're encouraged with the performance in the first quarter, sales up 4.4% at Argos. Specifically to your point, when we think about the composition of those sales, clearly Argos is a very seasonal business. We've always said that. We were up against a particularly weak comparative last year when the weather just didn't go our way at all in the first quarter of the last financial year.
When we look at the overall performance, what I would say is categories like outdoor, garden furniture have performed particularly strongly, but big-ticket items have not been so strong. There was Euros last year, which meant we sold a lot of TVs last year. That obviously has not repeated this year. When you look at it in the round, we would estimate around a third of the total sales growth in quarter one is attributable to both the seasonality that came forward earlier. Also, I should mention the Nintendo Switch as well, which was an important launch in the period. That is how we think about the breakdown of seasonal performance. Just within the categories, Isabel, to your question, obviously, garden furniture, as I say, strong, but some other elements, garden hardware, as I say, big TVs had a tougher period year on year.
When we think about, as we look ahead, Bláthnaid, do you want to come on that one?
Bláthnaid, CFO, Sainsbury's: Look, we've held the guidance flat year on year, but there's a few things to note here. Look, if the summer continues as it is, sales will continue and will continue to be competitive on that. It is a very competitive market. It is subdued at the moment, and we're feeling that as well. Let's see how the summer progresses to see how Argos progresses. The one thing I would say, and Simon talked about it earlier, we're really working through the strategy at the moment, working through the foundations on that, improving the range, improving the digital journey, improving the customer experience. That will take time. We're starting to see sort of early signs of that, but it will take time. Big-ticket spend is still under pressure in Argos.
Simon Roberts, CEO, Sainsbury's: Yeah, great. I think maybe just the last point to make as well to your question is, obviously, if the weather continues good, then it will continue to drive the seasonal performance. I mean, the reality is that last year, summer did not really kick off until July, running in reality halfway through the summer. Better weather in the period ahead will obviously help drive further seasonal sales.
Moderator/Operator: The next question is from Sridhar Nainani at UBS. Please unmute yourself and begin with your question.
Bláthnaid, CFO, Sainsbury's: Sridhar, good morning.
Hi, good morning. Thanks for taking my questions. Maybe just to go to detail with guidance, Simon. You're reiterating GBP 1 billion, and you've talked about capacity to invest. Maybe just two elements of the question here. One, how do you characterize the market and your investments in the period? Was there anything noticeable in the way the market was competing versus what you had planned out? Clearly, there is an element of phasing here. You've talked about it. Can you help us understand the moving parts so that we can have a better sort of first half, second half sort of numbers in the models? Thank you.
Simon Roberts, CEO, Sainsbury's: Okay. Shall I talk a bit to guidance and kind of how the market's behaving to your question, and then maybe, Bláthnaid, we can talk about how we think about first half, second half? Look, I think, look, clearly, this is a trading statement. We're 16 weeks into our financial year. It is early in the year, isn't it? Still much of the summer still to come. I think, look, in terms of how we characterize where we are, we would say that pretty much we're exactly where we expect to be on both our value and market position at this point in time. I think it's really clear we said this in April. There's clearly a lot going on out there, and everyone is raising their game. I think there's clearly the combination of an intensified focus on value.
A lot of brands are increasing their marketing investment at the moment to make sure that value cuts through. There is also a lot of cost pressure out there still that needs to be passed on. Inflation is moving through the system. Quite a bit's happened. There is still more to happen. That is the reason why, as you have said, we said at the start of the year that we were committed to sustain the strength of our value position. We spent four years building it. You can see here the benefits of that as we have come through the first quarter, biggest market share gain, biggest market share performance since 2016, the most competitive we have been, the best customer satisfaction metrics on value.
We are very focused on making sure we maintain that over the rest of the year, and hence the reason for ensuring we have the capacity, as we said in April, to be able to navigate whatever happens over the period ahead. I think just in terms of how we think about where we are, the market is behaving rationally. You can see our relative strength on value this morning. There is no doubt there is more focus on value, and there is more focus on making sure customers get to see the value in the offer. Bláthnaid?
Bláthnaid, CFO, Sainsbury's: Yeah, great. Great question, Sridhar. You would not expect us to update guidance 16 weeks into the year on that, but we are pleased with what we are seeing in Q1 and the performance and how it is playing out for us on value and on market is exactly where we expected it to play out. What I would say on profits, we talked at year-end that we would expect them to be more H2 weighted. There are a few reasons for that. The first one is the estate comes online, the rebalance of the estate and the new stores, and you have got some disruption happening in H1. The second thing is this EPR tax that we talked about that needs to be booked in H1. That is the accounting rules that have become clearer in the last few weeks. You will see that all being booked in H1.
That's about an incremental GBP 30 million or so booked in H1. It is a timing, so we're still holding our guidance for the year.
That's very helpful. Thank you.
Thanks, Sridhar.
Moderator/Operator: The next question is from William Woods at Bernstein. Please unmute yourself and begin with your question.
Bláthnaid, CFO, Sainsbury's: Hello, William. Good morning.
Hi, good morning. Hi, Simon. Hi, Bláthnaid. I just wanted to build on Sridhar's question, really. Obviously, we're kind of six months into the price investment cycle now. How much do you think these price investments are kind of noise in promotions or marketing versus a kind of real structural change in the pricing landscape? I suppose, just is there any change to anything that you've seen since we maybe spoke at your full-year results? Thanks.
Simon Roberts, CEO, Sainsbury's: Thanks a lot. Let me just try to build on what we've said. Look, you saw in the slides I shared at the top of the call that we've actually strengthened our relative price position against competitors through the first quarter of the year. I think that's a function of two things, really. One, the strength of our offer, the combination of now the biggest Aldi Price Match in the market, 9,000 products on Nectar Prices and everyday low prices. What we're seeing is, as the combination of this focus on value continues to play out, but of course, inflation gets passed through in the market as well, that we're able to make sure that we continue to sustain the strength of the value position that we have.
I think in terms of what's been happening, as you say, there's a lot of noise out there. One of the things that we have stayed very focused on, and we said this right from the beginning, our value investment has always been focused in the center of the plate, the key categories, the key products that customers buy most often. That has been the single biggest determinant of the shift for us in customer value perception and the single biggest driver of the reason why a million more primary customers are now shopping at Sainsbury's, which is the confidence in those products at the center of the plate that customers are now feeling really sure about, and they're then shopping across the rest of the store.
Obviously, every brand is following their own relative strategy on value, but for us, that has been absolutely game-changer because when you're in fruit and vegetable, when you're in dairy, when you're in meat, fish, and poultry, the key areas at the center of the basket, that's where customers have got real value now. We have been absolutely determined to stick to and continue to drive that plan forward. In terms of as the year plays out, I think we're very early in the year, as Bláthnaid and I have both said. There are certain moments in the year, aren't there? The back-to-school period in September, the running to peak. There's still a lot of this year to happen, which is why it's very important we maintain the capacity we need to ensure we can sustain the strength of our value position.
You can see the momentum we have in the business. We're encouraged by it, but we're not at all complacent with it. There's a lot more to do. We've got a very focused plan this year. Above all else, we're going to make sure that customers see more and more reasons to be confident and trust our value position, which is what we're seeing really underpinning our position. The marketing effort, I think, is to be expected as value focus increases. There was always going to be more above the line. You saw at the top of this call, we shared our latest activity. We're out on both value and innovation, and it's really working at the moment. Thanks, Will.
Moderator/Operator: Just a reminder, if you would like to ask a question, please use the raise hand feature at the bottom of your screen. Alternatively, if you've dialed in, please press star nine on your handset now. The next question is from François Desgardes at Kepler Cheuvreux. Please unmute yourself and begin with your question.
François, good morning.
Bláthnaid, CFO, Sainsbury's: Good morning. Thank you for taking my question. I'm doing well, yourself?
Yeah, good to see you.
Within our goals, thank you. Within our goals, what proportion of sales do stockless branches represent? For the rest of the business, how do your stock levels compare to your historical benchmarks? Thank you.
Simon Roberts, CEO, Sainsbury's: Okay. Just, I guess, to try and get behind your question, the key point here really is that we've had an encouraging start in our cost, delivering sales of 4.4%. If the kind of question behind your question is, how are we feeling about our stock levels at the moment, particularly on seasonal products? We're comfortable about where we are. We've obviously bought a quantity of stock to make sure we can satisfy the season. The point I made before, we've had May and June. There's still July and August to come, and we're well set to make sure that we can continue to give good availability, but also manage our stock levels in the place that we need to be on, particularly the seasonal areas. Overall, I think we would say encouraging start at Argos, weak comparative last year.
Obviously, the comp gets significantly more as we cleared a lot of clearance out last year. We are going to keep very focused on making sure we deliver our goals plans through the coming weeks. Look, if the sun continues to shine, that will present opportunities to make sure we can take advantage of that. More broadly, to your question, stockless is playing a really important part as part of our more goals, more often plan. We know that customers love our goals, but they want to find a wider assortment of products on the goals platform. That is why we are bringing more brands, more product ranges.
Now, in the thousands, as we add more content to the Argos platform, we made quite a big move forward with this last year, and we're continuing that momentum this year, adding more brands, adding more products, and making sure that when customers shop at Argos, they can get the full range of both categories, assortment, and brands that they want to find. We are finding more and more that brands want to come on to the Argos platform, which is also really encouraging too. A building picture here, François, and one that will be a really important part of delivering the more Argos, more often plan. Thank you.
Moderator/Operator: Our final question is from Isabel de Sauder at Morgan Stanley. Please unmute yourself and begin with your question.
Bláthnaid, CFO, Sainsbury's: de Sauder, good morning again.
I've reentered the queue because it was only one question.
No problem.
I'm actually very interested in the Nectar 360 Pollen. Could you give us some examples of how you are going to incorporate AI in the platform? Could you give us some examples of what features this platform has which make it differentiated versus what else is on the market to make it the most advanced unified retail media platform so that we can understand how it compares to the peer group as well?
Simon Roberts, CEO, Sainsbury's: Yeah, no problem at all. Thanks for the question. It's a really important area for us to focus on in the call, actually, because I would say that we've had a phenomenal response from brands and partners and agencies to Nectar 360. The team took this to the recent Cannes event, and the response was way beyond actually what we expected. Why is that? Maybe if I can just try and unlock a bit, if you're a brand or an agency, how this is going to work for you. If we just take an example, I'm a big brand or an agency working for a big brand, and I want to build an omnichannel marketing campaign.
I'm going to be able to log on to Pollen, and I'm going to be able to feed into Pollen the marketing brief and then support it, as you say, with AI. Pollen will then support the decision-making on which channels to use, where the campaign will be run. That could be media within the media network. It could be outside Sainsbury's or Argos. We'll help build towards a targeted audience. It will then, with AI, help set up operationally the campaign as well. Effectively, fast access into a platform, navigating how the campaign wants to launch, and then operationally building the campaign, all of that powered by AI. By the way, I should add, we've developed this in-house.
It's been a really strong example of us working across boundaries, Nectar 360, digital technology, D&I, all working together, D&I, our data analytics capability to build this in a really focused way. Once activated, it will measure attribution and reporting and also take care of invoicing and billing as well. Really bringing an unrivaled platform for brands to be able to move with real agility, but also speed to execute their marketing campaigns. We go live with this in the autumn. Lots of excitement and lots of opportunity for brands and partners and clients to be able to access that capability. Thank you.
Just a real shout-out to our team, actually, on this, who have worked in a really determined way, led by, as I say, the huge focus in Nectar 360 and our technology teams to build this in-house, and something we really want to make sure really drives a real difference for us. Great. Is there any more questions?
Moderator/Operator: We have one further question.
Bláthnaid, CFO, Sainsbury's: Oh, great. Yeah.
Moderator/Operator: One further question from Sridhar Nainani at UBS. Please unmute yourself and begin with your question.
Bláthnaid, CFO, Sainsbury's: Hi again, Sridhar.
Hi, Simon. Sorry to come back in the queue. Just one follow-up, please, on Argos. Simon, you referred to tougher comps in Q2 to come, which just helps us understand the shape a little bit. I think comps are tough, admittedly, relative to Q1 to Q2, but they were last year driven by markdown sales because of poor Q1. We will be writing the margin comps are easier, and hence, if sales remain healthy, back to your point about summer weather, July was trading still to come, we should not see the level of markdown activity relative to Q2 last year. Is that a reasonable assumption?
Simon Roberts, CEO, Sainsbury's: Yeah, no, thanks, Sridhar. Let's just go through quarter one, quarter two last year. As you say, quarter one last year, we had a very poor weather period, which meant we did not see the seasonal sales that we have been able to capture this year. It also meant that there was a building level of stock coming through quarter one into quarter two that we then, as you say, needed to clear in the second quarter last year. What effect did that have? It definitely drove volume. You can see when you look at the comps last year, we had a relatively stronger sales quarter in quarter two as we cleared all that seasonal product. It was the right thing to do, to clear through on the seasonal product and get a clean edge into quarter three.
That gave a volume upside in the second quarter last year, but a margin impact. As we come into the second quarter of this year, what we are signaling is that we are encouraged with the sales performance at 4.4%. As I said earlier, we have had some benefit from the weather. I should stress the underlying strength of Argos is improving. The work the team are doing to make sure we get availability, to make sure that we get an improved digital experience, that is really starting to come through. We expect that to continue. We also know that the market is incredibly competitive. That is the point I would just add. Particularly, the global digital players have seen some of the recent events, particularly around tariffs, for example, as an opportunity to really step up their digital PPC investment into the U.K. market.
As we come into quarter two, we're going to have to be very focused on making sure our offer is strong in the context of the market. That's why we should know that the comparatives on sales are tougher as we come into this quarter. While we need to make sure that the offer shows up really well, take advantage of both the weather and the customer mindset out there so that we can navigate what is still a highly competitive market.
Okay, thank you.
Thanks, Sridhar.
Moderator/Operator: That was our final question. I will now hand back to Simon Roberts for closing remarks.
Bláthnaid, CFO, Sainsbury's: I know we've got a few people on holiday this week. Thank you to everyone for joining the call that's been able to join. I hope that's been a useful call. Really appreciate your questions. Look, as I said earlier, we're really pleased about the strong start to the year we've had and the momentum that we've got. As you can see, we're exactly where we set out to be back in April, both on value and on our market position. Strong performance coming through the first quarter, well set for the summer. We very much look forward to obviously continuing to deliver our plan and to catching up with you through the summer and, of course, our interim results in November. Thanks, everybody, and I hope you have a great summer.
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