J Sainsbury PLC (LSE:SBRY) has launched a new strategy focusing on improving its food volumes while managing costs effectively, with shareholder returns remaining a key area.
Under the new three-year plan unveiled in today's statement, the UK’s second-largest supermarket said it is aiming to grow food volumes ahead of the market, improve customer satisfaction and implement £1 billion in cost savings.
A strong balance sheet means Sainsbury’s will increase its reinvestment into the company, but also allows for greater shareholder returns.
Some £200 million is predicted to be returned to investors through a share buyback scheme, while management is expected to implement a “progressive dividend policy”.
Retail operating profits are expected to grow from the start of the plan, the company said.
It will increase capital expenditure by as much as £850 million each year and plans to deliver £1.6 billion in free cash flow over the next three years to March 2027.
‘Next Level Sainsbury’s’ will target more big basket shoppers, with the plan to make it the supermarket of first choice for most people.
Additionally, the group will continue to leverage technology to drive cost savings, while trying to improve both its Nectar loyalty card and operations at Argos.
Simon Roberts, chief executive officer at Sainsbury’s, said: “We're determined to be First Choice for Food, ensuring more customers in more of our stores can enjoy more brilliant Sainsbury's food.
“That means more space for our food offer, while still delivering the general merchandise products customers want from us. That way, not only will we find more ways to delight new and existing customers, we will also continue growing volume market share.”
Over the last three years, the supermarket has carried out its 'Food First strategy', which aimed to grow the business with a “much sharper position of value and a major refocus on innovation”.