Sainsbury’s sets £1bn new savings target, eyes higher returns

Sainsbury's unveils new £1bn savings plan, eyes higher returns via share buybacks and progressive dividends.

Berto Tordecilla

Berto Tordecilla

Sainsbury’s (LSE: SBRY) has unveiled a new three-year cost savings plan worth £1 billion while promising shareholders improved returns, sending its shares down 3.7% in early trading.

The goal, part of Sainsbury’s “Next Level Sainsbury’s Strategy,” builds on existing efforts that have removed £1.3 billion in expenses over the past three years and £2.5 billion in the past decade. Sainsbury’s, which trails only Tesco in UK market share at 15.7%, also aims to accelerate food volume growth and boost customer satisfaction by March 2027.

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As part of its shareholder returns push, Sainsbury’s plans to commence a £200 million share buyback programme in fiscal 2024/2025 alongside a “progressive dividend policy” next year. This accompanies a recently-announced 9% pay rise for 120,000 employees costing £200 million annually.

Sainsbury’s share price has dropped 8.9% year-to-date. The new strategy aims to build on Sainsbury’s recovery in 2023, when it won back customers from German discount chains Aldi and Lidl. The company also plans to exit banking services.

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