Justin King chief executive

Making Sainsburys Great Again 2008/09 operating review

Strong profit growth from good trading performance Clear customer understanding Operating from a strong strategic, operational and financial position Long-term strategy provides significant growth opportunities

Making Sainsburys Great Again Strong growth from good trading performance

Sales up 5.7% (1)

- continued growth in customer transactions and basket size

Like-for-like sales up 4.5% (2)

- underpinned by like-for-like growth from core estate

Underlying profit before tax up 11.3% - operational gearing being delivered from sales growth - further investment in customer offer and tight control of operating costs

(1) Sales including fuel and VAT (2) Easter-adjusted, excluding fuel. VAT-adjusted LFL of 4.8%, excluding fuel

Making Sainsburys Great Again Strong growth from good trading performance

Four years of consecutive like-for-like sales growth Recovery is being sustained and growth being delivered

% Like-for-like sales growth 20

16

12

8

4

0 2007/08 2008/09

LfL 2 year LfL 3 year LfL 4 year LfL

Making Sainsburys Great Again Clear customer understanding Challenges Easing Pressures

Customers bombarded with bad Lower petrol prices news about the economy

Energy bills down

Low consumer confidence

Mortgage costs reduced

Fear of unemployment

Property values falling

Leading to

Reduction in big-ticket purchasing

Pay-down of unsecured household debt

Non-food supermarket spend relatively resilient

Food spend holding up well

Making Sainsburys Great Again Sainsburys Universal Customer Appeal well positioned

Range of value options over good, Ethical issues remain high on better, best hierarchy customer agenda

Expanded basics range

Customer recognition of leading position on higher welfare products and Fairtrade

Three key themes to deliver value

Making Sainsburys Great Again Shop and Save

Price perception better Additional promotional space reflects price reality

Relaunched point of sale messaging

Upweighted promotional programme

Making Sainsburys Great Again Switch and Save

Customers have unrivalled trust in Sainsburys own-brand products Own-brand strengthened with new lines and brand beating quality At least 20% cheaper than leading brand

Making Sainsburys Great Again Cook and Save

Simple cooking ideas with fresh Food ideas to help Sainsburys food customers cut waste

IGD Award for Consumer Reflects concerns about Understanding value and the environment

Making Sainsburys Great Again Operating from a strong position Brand Colleagues

140 years of offering customers great Engagement high with products at fair prices lower turnover

Universal customer appeal caters for Bonuses for four full range of needs and budgets consecutive years

Operations Financing Focus on more efficient processes Long-term funding Best-ever service and availability Property asset-backing

Making Sainsburys Great Again Long-term strategy provides significant growth opportunities

Five areas of focus Great food at fair prices Accelerating the growth of complementary non-food and services Reaching more customers through additional channels Growing supermarket space Active property management

Making Sainsburys Great Again Great food at fair prices

Great food at fair prices underpins overall brand positioning - universal offering through good, better, best hierarchy

Value for money being delivered uniquely - Shop and Save - Switch and Save - Cook and Save

Quality position versus grocery competition widens - our values make us different

Sales densities increasing across the store - growth in lower share categories

Making Sainsburys Great Again Accelerating the growth of non-food and services

Offer positioned to complement core food offer - strong growth in TU clothing - TU home launched new home and lifestyle ranges

Infrastructure - 450 colleagues led by Luke Jensen at non-food support centre in Coventry - further opportunities to enhance IT and logistics to support growth

Growing Space - half of new space dedicated to non-food ranges

Sainsburys Bank

Continued investment in growth, multiple revenue sources - insurance, savings and credit cards main areas of focus

Improved trading performance and well capitalised

Making Sainsburys Great Again Additional channels

Convenience 290 stores operating in high st. and neighbourhood locations Significant improvements in operating performance 50 new stores in 2009/10, 100 new stores in 2010/11

Groceries online Sales up 25% in 2008/09 and annualising over 500m Now delivering over 100,000 orders a week, with best service metrics ever 88% of UK households covered

Non-food online On track to launch in first half of 2009/10

Making Sainsburys Great Again Growing supermarket space

Proven ability to deliver good quality space - successfully operate small to large formats - 12% space growth over three years for 2.5bn capex - higher freehold mix at over 75% freehold and long-leasehold

Good pipeline of space - over 4% gross space in 2008/09, over 5% expected in 2009/10 - pipeline to deliver 5% per annum ongoing

Environment for growing space changing - significant opportunities for acquiring land becoming available - larger, more cost-effective store extensions and lower-cost new stores

Making Sainsburys Great Again Active property management

Significant development potential - 297 freehold and long-leasehold properties - 54 extensions completed in last three years

British Land Joint Venture - investment to develop 25 supermarkets - two extensions already completed, ten projects currently through

planning consent process

Land Securities Joint Venture - five properties planned for future mixed-use development

Eight supermarket sale and leaseback transactions completed in 2008/09

- developed stores sold to invest in stores with development potential

Making Sainsburys Great Again Summary

Good performance in 2008/09 Offer developed reflecting customer understanding Operating from a strong strategic, operational and financial position Long-term growth coming from embedded strategy

Preliminary Results 2008/09

Prelims_2009_FINAL_Analysts_Presentation.pdf