J Sainsbury Beats on Profit in Fiscal 2022, but Fiscal 2023 Guidance Disappoints; FVE Maintained

J Sainsbury reported fiscal 2022 results with like-for-like sales growth down 2.3% (up 3.6% including fuel) and underlying profit before taxes of GBP 730 million versus GBP 727 million for company-compiled consensus and GBP 673 million in our model. The grocery performance slowdown was largely expected as the benefit from increased food-at-home consumption trends started to wane, down 0.2% for the year but up 7.6% on a two-year basis. In other categories, clothing and fuel grew 12.7% and 60%, respectively, with gross merchandise sales down about 12%, all the result of normalization patterns from the reopening of the economy. Notably, groceries online now account for 17% of overall grocery sales, with 39% of the group's sales originating in the digital channels.