Sainsburys has set a new cost savings target of £1 billion over three years and has promised to boost returns for shareholders.
In a strategy update, the number two British supermarket retailer committed to deliver growth in food sales volumes ahead of the market by March 2027.
It also laid out its intention to deliver high customer satisfaction and growth in retail operating profit, while investing in technology and infrastructure.
The “Next Level Sainsbury’s” strategy aims to build on the “Food First” strategy launched in 2020 by chief executive Simon Roberts, which has drawn customers back from retailers such as Lidl and Aldi.
Sainsbury’s current plan is taking £1.3 billion of costs out of the business in the three years to the end of March 2024.
Completion of this project will mean the group has cut £2.5 billion of costs over the last decade.
It has made cuts by reducing delivery and waste, although it has not given a detailed breakdown for the new plan.
Sainsbury’s said it would pursue a progressive dividend policy from the start of its 2024/25 financial year and commence a share buyback programme, with £200 million of share capital to be bought back in that period.
It kept its forecast for retail free cash flow of at least £500 million per year, and forecast at least £1.6 billion over the next three years.
Capital expenditure would increase to £800-850 million per year over the period, while cash costs associate with the cost saving programme would be about £150 million.
Sainsburys already announced a 9% pay hike for 120,000 workers from March, costing £200 million.
It also said it would wind down its banking business and instead offer financial products through third parties.
Sainsbury’s shares rose 39% in 2023, but they have fallen 9% this year on concerns over the outlook for general merchandise.