Time is right to step up investment, Sainsbury’s CEO says

LONDON (Reuters) – British supermarket Sainsbury’s believes that having improved its financial performance over the last three years, now is the right time to step-up investment, its boss said on Wednesday.

Speaking to reporters after Sainsbury’s published a strategy update, CEO Simon Roberts highlighted the group’s next to no debt and strong free cash flow generation.

“We feel it’s really the time now to make targeted investment that successful grocers will need to make,” he said.

The group – which has a 15.7% share of Britain’s 229 billion pound food market, trailing only Tesco – plans capital expenditure of 2.4 billion pounds to 2.55 billion pounds ($3.22 billion) in the three years to 2026/27 targeted at the technology, automation and fulfilment areas.

“When we look at the industry in the UK, we think that many of our competitors will not be able to make those investments or make them cost effectively at this point in time,” said Roberts.

“It’s really this that we believe will increasingly separate out the winners from the rest of the industry.”

Roberts also plans to invest in Sainsbury’s stores to bring more of its food range to more customers, noting that only 15% of its supermarkets offer its full food range.

More space will be created for food in 180 stores by reallocating space currently occupied by general merchandise and clothing, particularly where products overlap with Sainsbury’s Argos business.

The strategy update also featured a new target for cost savings of 1 billion pounds over the next three years.

Roberts did not rule out job losses.

“We protect jobs as much as possible, we drive flexibility as much as we can and we re-skill where we need to,” he said.

($1 = 0.7916 pounds)

(Reporting by James Davey. Editing by Jane Merriman)