Thank you. Good morning, everyone, and a happy new year. I'd really like to thank you for joining us at short notice this morning to talk about our quarter three trading statement covering the 15 weeks to January the 2nd. I'm joined this morning, of course, by Kevin O'Byrne, our CFO. I'm going to give a brief summary first. I'm going to refer to the slides that we sent around this morning, and which are available on our website. Of course, we'll be happy to take all your questions. Just turning to the slides to begin with. I think it's worth reflecting obviously first, this was another extraordinary and challenging trading period, and we played a really strong role in feeding the nation. If I turn to Slide two, headed Quarter Three and Christmas Performance, our stores were well-stocked throughout, despite some significant supply chain challenges. We continued to grow online delivery capacity, whilst customer satisfaction measures of speed and friendliness of service and product availability were the highest we've ever seen at Christmas. Argos again demonstrated the strength of its digital platform with nearly 90% of its sales starting online during peak. All of this was down to the hard work of all of my colleagues, I would like to say again, a huge thank you for all of their tremendous work. It really was an outstanding team effort across every part of the business, given the highly dynamic situation that we saw in the run into Christmas. I and many of the team spent our time out across the business in the fortnight ahead of Christmas itself, and saw firsthand the outstanding job our colleagues did in providing the safest shopping environment possible, while delivering leading service and availability. I believe we delivered really well for our customers this year, and we learned a lot too about what worked across our offer and also where we can improve further for next year. The result was like-for-like sales growth of 8.6% for quarter three, or 9.3% over the more recent nine-week period since the start of the second English national lockdown. This growth and our expectation that sales growth would remain elevated through the period of the lockdown we have just entered, drive the increase in profit expectations that we've announced this morning. I'm now going to turn to slide three, which shows the retail sales growth by category. Clearly on this chart, this shows good progress across the board. Clearly reflecting a second lockdown in England and the COVID restrictions more widely. Also very strong execution across our digital platforms for groceries, Argos, and clothing. We've seen continued recovery of general merchandise and clothing sales in Sainsbury's stores with very good seasonal performances from both. We've also referred in today's statement to a strong general merchandise and clothing margin performance, driven in part by a significantly higher proportion of full price sales. This has been profitable growth to us alongside an Argos Black Friday strategy, which traded some sales in favor of a more disciplined promotional stance, as we previously described at the interims. Turning to slide four, which specifically focuses on our digital sales. I talked earlier about strong execution across our digital platforms. You can see here, on this slide, digital sales increased by more than 80% over the quarter and accounted for more than 40% of our sales. Argos digital sales increased by 49%, with nearly 90% of the sales starting online. A clear demonstration of Argos's digital capabilities through the peak periods of both Black Friday and Christmas. In grocery, online accounted for 18% of grocery sales, a step on from the 15% we reported for the first half, with 16% of these being Click and Collect. Notable that the Click and Collect peaked at 24% in the key Christmas week. We worked hard to continue to increase delivery and Click and Collect capacity, despite the challenge of bigger Christmas basket sizes. We saw a good acceleration in the rate of sales growth ahead of Christmas. Turning to slides five and six, focusing on the grocery sales performance versus the market. In November, we committed to report consistently against a set of metrics, and on slide five we show one of these. Our grocery market share, where despite tough comparisons and a very disciplined approach to promotions and other trade-driving activity, we grew ahead of the market and outperformed some key competitors. That's reflected in Slide six, which shows performance over the core food and drink categories, stripping out some of the noise from beers, wines, and spirits promotional activity. On this measure, we outperformed all of our key competitors over the quarter. I know the eagle-eyed amongst you will have noticed that we're using Kantar value data, where previously we've shown Nielsen volume data. This is simply because we brought our statement clearly forward a week. The Nielsen data covering Christmas itself is not yet available. Turning to slide seven. As much as it's online that's delivering the big headline growth numbers, more than 80% of our grocery sales still go through our supermarkets. I'm really pleased that we have seen some of our strongest ever customer satisfaction scores, a real tribute to the brilliant job our team have done. We encouraged customers to shop early to help reduce capacity challenges on peak days with initiatives like our 10x Nectar points offer. We invested in more Smart Shop handheld scanners to help deliver great availability and service. Smart Shop accounted for nearly 30% of sales in handset stores over the quarter. Customers recognized this with great scores for product availability, speed of checkout, and availability of colleagues. At the same time, we've not yet made much progress on value perceptions, and we could have done better in some other areas such as premium products and innovation. Taste the Difference sales were up more than 11% over the period, and we know that others saw stronger growth in premium own label, albeit from a smaller base. We have more to go for in these premium areas as we think about the year ahead. Now turning to slide eight. This shows that we really stepped up to deliver for customers over Christmas in terms of online capacity. We continue to move at pace, and we'll deliver more than 835,000 online orders this week. We were at 340,000 back in March and 700,000 at the end of quarter two. Turning to slide nine, we said in November that the profitability of our groceries online business had stepped up considerably over the first half, and this has continued given strong productivity metrics. We increased capacity beyond our original estimates, largely from the same fixed asset base, despite the challenges of peak trading. I'd also like to highlight the progress in van utilization and items picked per hour, in particular, which is now broadly back at the levels achieved ahead of the pandemic. We showed you the chart on the right at the interims where we were ahead of the pack on online customer satisfaction. Updated for quarter three, this suggests that our growth might have, in a couple of areas, come slightly at the expense of customer satisfaction. We're focused on bedding down our new capacity to deliver a consistently strong customer experience. Moving to slide 10, and last but by no means least, I would like to highlight the operational performance at Argos over the peak period. With nearly 90% of sales now starting online and huge growth in Click and Collect and home delivery. This represents very strong execution and a real demonstration of the strength of the Argos platform as we transform the business model. On slide 11, turning to the year ahead. We still face a lot of external challenges through COVID, and we're expecting a much tougher consumer backdrop. A focus on the priorities we set out in November will put us in good shape. On food, we have very strong plans on value and innovation that you will start to see in stores very soon. We're well underway with the Argos transformation plan, and the Bank is in good shape. Underpinning this, we will need to deliver the significant step-up in our cost savings, and we are executing at pace. We will provide a full update on our early progress with our preliminary results in April. Finally on slide 12, I committed to come back to you every time we speak on our key metrics. This time around, I can say that we've delivered really encouraging customer satisfaction scores and a solid grocery market share performance. We're in a strong place relative to the recent guidance on profit and cash, and we will come back to these metrics at the time of our preliminary results in April. I'm encouraged by the progress, and as you would expect, our new top team are fully focused on executing our plans for FY 2022. Thank you for listening, and I'll now ask that we open the call up for your questions. Thank you. Thank you, if you have a question, please key star then one on your telephone keypad, if you wish to withdraw your question or the question has already been answered you can simply key star two. Please standby for your first question. Thank you. Your first question comes from Andrew Gwynn from Exane BNP Paribas. Please go ahead. Morning, Andrew. Good morning, team. Morning, Happy New Year, of course, starting off in style. Congratulations to you and indeed the team for a good quarter. I guess the questions, well, they're kind of boilerplate questions really, which I'm sure you anticipate. Profit for next year, obviously this year's profit is down substantially year-on-year, albeit better than implied. If COVID hangs around, which unfortunately it feels like it is going to, what's the right base of profit? Obviously GBP 330 versus high GBP 500s. I know you've already given us some guidance on profit for next year, but just wondering on your thoughts if COVID continues to hang around. The second one, unfortunately, online. Some impressive stats there, but obviously 24% Click and Collect is one that particularly jumps out. I'm just wondering what the lessons are as we go into the next year, particularly obviously thinking about the profit journey with online and connected to that, obviously, your plans for more capacity addition. Thanks very much. Thanks, Andrew. Maybe I'll ask Kevin maybe just to comment on as we look ahead, and then I'll come back and talk about online. Kevin? Andrew, morning. Andrew, sitting here this morning, we wouldn't expect anybody to be moving forecasts for next year. Just to be clear, the upgrade today obviously is related to specific circumstances, and let's call them pretty unusual circumstances that we've seen in the last period of time and our view of the remaining weeks in this financial year. We reiterated the at least GBP 586 million for FY 2021/2022 when we last spoke, and that included the extra drag of GBP 30 million of business rates next year. At the moment, we're focused on closing out this year before we talk in more detail about next year. Still a lot to do to manage the rest of this year, and then we'll talk again when we next speak to you about next year. Thanks, Kevin. Just to come back on that. Obviously, if COVID hangs around a bit longer as it seems to be, should we have it in mind that GBP 580 could be a little bit lower given some of those COVID costs? It certainly will bring some plus and minuses, which we'll work through. At the moment, we've no further update. Okay. Clear. Thanks. Sorry, Simon, go ahead. Sorry. No, thanks. Just, Andrew, to your questions online. Just sort of two quick recaps and then your questions on looking ahead. I think the headline point here is 340 in March to around 700 at the interims to 835 last week. Our absolute focus here is on opening up the capacity as far as we can to meet the demand, obviously, from customers as we go into the third lockdown. Not surprisingly, we've seen further demand peak this week. I think the Click and Collect point, as you call out, it's an interesting one. We saw Click and Collect really open up in the first lockdown. As customers are now clearly working from home much more, and actually, in a more convenient way, in many cases, of being able to get online groceries when you want to. What we found, I think, is a continued capacity in our network to open up more order slots using Click and Collect in the Christmas week, 24% I think, was a real indication of that. That worked for customers, and it worked for the business because it meant we could provide more capacity, we could provide it efficiently, and we could, as I say, get up to that 835,000 level. Of course, as you would expect, we're doing lots to look at where else we can grow more capacity. I think it's really clear that the in-store pick model, we're really leveraging the fixed assets. Our colleagues are doing a fantastic job. They continue to improve our operations, so we improve our productivity. You've seen our update this morning on our orders per van and drop density improvements. As we said at the interims, we're very focused on the operational improvements, and we'll keep pushing those. Obviously, a third lockdown, social distancing, incredibly important, safety, very important. I think in the next few weeks, we'll be keeping a very close eye on that. There'll be plenty of lessons we'll keep learning. We're very determined and very focused, and the team are doing a fantastic job of opening up capacity and making sure that we use Click and Collect as much as we can. Perfect. Thanks, Simon. Thanks. Thanks, Andrew. Thank you. The next question is from Fabienne Caron from Kepler Cheuvreux. Please go ahead. Yes. Good morning, everyone, and happy New Year from my side as well. Three quick questions. Could you help us and give us an idea of the sales growth of the supermarket compared to the convenience stores in Q3 and maybe year to date? The second question on online, when customers decide to go for Click and Collect, is it same-day delivery compared to next day delivery for home delivery? The last question is, how did you keep with the increased volume in online for your store pick model? Did you ask your employees to work at night while the stores were closed? How did you manage this concretely to avoid disturbance in stores for customers going shopping in stores? Thank you. Okay. Thanks, Fabienne. I'll maybe ask Kevin just to talk a bit about the sales mix between supermarkets and convenience, and then I'll try to give some more color on the online questions. Morning, Fabienne. The sales profile that we saw in quarter three mirrored what we saw in the first half. Supermarkets that didn't have any grocery online capacity, we saw sales down slightly, although better than in the first half. Supermarkets, clearly with Argos store-in-stores with grocery online or the combination of both of them, we saw strong sales growth overall from the box. As you know, we look at the total economic box, if you like, when we're looking at the overall profitability of the units. Convenience, the performance sales were down in convenience year-over-year, better than quarter two, but down. Again, the same profile as we outlined, I think it was in slide 39 in the H1 update, where the less urban stores were growing, but overall sales were dragged down because London stores in particular and city center stores were down materially 15, 16% year-over-year because of their location and clearly not having the footfall in those locations due to the various lockdowns across the country. Probably one other thing to add, just on the convenience, we opened five in the period, two of our new neighborhood store model, and we're really pleased with how they've performed over the Christmas period. Yeah. Thanks, Kevin. Then on to the online question. I think on sort of two dimensions of Click and Collect, just to make sure we cover both angles. On the grocery business, clearly customers can make a choice to Click and Collect in their store. Following the same pattern of either picking home delivery or clicking Click and Collect, and as we say, more customers traded into that into the Christmas week. We'll continue to make sure that the option of Click and Collect is as aware for as many customers as possible. I think shouldn't underestimate also the Argos business on what happens on Click and Collect. Of course, we've got the four-hour Fast Track collection promise. Click and Collect in Argos, very strong through the quarter, 300,000 Fast Track deliveries we did as well. Actually, just as we're talking about Fast Track in Argos, over the Black Friday weekend, obviously, as you'll remember, we guided to at the interims, then we had a slightly different promotional approach with more discipline about the number of promotions we did on Black Friday, but we really focused on speed and convenience, and we saw Fast Track collection and Fast Track delivery really perform. In fact, the fastest Fast Track delivery over the Black Friday weekend, the team shared with me was 57 minutes. Four hours is the promise. That's the best we got to. Therefore, Click and Collect both in the Sainsbury's channel and in the Argos channel is something we really want to drive, so it's really convenient for customers. On your question about picking of online and what we're doing to balance the challenges of social distancing and disruption for customers and making sure we can both serve our customers in store and online well, a few things we've done. We've increased the picking window. Just again, honoring the fantastic job our online colleagues have been doing. We start picking now at 2:00 A.M. rather than 4:00 A.M., which opens up the window to get more of the pick done before we get into the trading day. We've increased the delivery window time later into the evening. We've introduced more saver slots so customers can pick slots where there's capacity available at a better value price on the delivery slot. We're doing all sorts of things to fully optimize the window. Of course, as we put more volume through the home and delivery channels, the improvements in reducing the stem mileage and increasing the drop density is important because we're traveling less distance, and therefore we can get to more orders more quickly. Just a whole focus in that area about making sure the store experience is balanced between online and home delivery and making sure, as I say, we continue to drive the best service and the best efficiency we can. Okay, just to make sure I understand of Click and Collect for grocery. Can I get the order in four hours for Click and Collect for grocery, or is it next day? It's for next day. It's always next day. Okay. Thank you. Thank you. The next question then is from Sreedhar Mahamkali from UBS. Please go ahead. Hi, good morning and Happy New Year all. Three questions from me as well, please. Firstly, on online, some of the key drivers, very helpful in the slides. Couple of questions there. Firstly, on pick rate, how much further can you drive those now that they're pretty much back to pre-COVID levels? That's the first one. Second one, can you give us a sense of what's also been happening to the average delivery fee, please? Particularly in the context of what I see as like GBP 1 slots, which are quite likely well below the cost. The last one is Argos growth. I know you called out a couple of categories. I'm just trying to understand how broad-based the growth was, contribution from gaming and any other key areas. That would be super helpful. Thank you. Thanks. Let me try and just give you as much sense on the questions on online, then we'll pick up Argos. I think on pick rate, just to cover the history and then where we are now. As you've seen on slide nine, and we talked about this at the interims, we've seen progressive improvements, double-digit improvements in item pick rate over the last three years. The challenge absolutely, as you say, was to, conscious of all the social distancing impacts and the operational challenges to get back to that level, and that's where the team has got to. I think for the first point is to hold the level of item pick rate at where we were before COVID, and that's broadly where we're back to now. I think obviously we're into a third lockdown, that will necessarily and absolutely brings an absolute focus on safety. In this immediate period, I think our objective is to make sure we provide as much capacity for customers. We're prioritizing elderly, disabled and vulnerable customers again, we do that at the level of pick rate we're now achieving. We're through the Christmas peak period. That helps a little bit. Of course, there's less customers in store, there's a balance between the impact of the lockdown making it a little more challenging versus the fact we can get around the store a bit quicker at this time than we could in the middle of December. I think we're very focused on the pick rate. We're very focused on the online metrics of pick rate, drop density, average baskets and the Click and Collect participation, and you'll see us continue to focus on those, and we'll update clearly at the end of April in the further progress we make through the period. In terms of delivery fees, we use dynamic slot pricing. We can constantly look at how do we optimize how we fill our slots, but also how we do them economically in the best way and we continue to do that. I'm sure as we come through the Christmas review, we'll continue to take lessons from that. One thing that I think is very clear that the online demand continues to grow and the fact that we've gone from 700,000 in November to 830 last week just shows the size of the opportunity that's there. That's why we're very focused on both the service and the operational efficiency. One point I should have made, just to Fabienne's earlier question and links to your question online too, is of course we have seen continued same-day service at Chop Chop really pick up. That's been a really positive feature of our performance on the Chop Chop platform, where you can order for fast delivery. Obviously, we've been using delivery platforms to help with that, and we've seen some of the stores, actually a lot of the convenience stores that are the fulfillment basis of Chop Chop, you see some really strong sales coming through. Just to give the other angle on Chop Chop and how that's working. Then on Argos, let's give a better sense of how the Argos business has done and some of the key factors. Kevin, maybe do you want to comment on that? Yeah, of course. In Argos, I'd pick out five big categories that are very important during this particular quarter. TVs, very important. Gaming, very important. Furniture, very important. Toys, not surprising. Then if you put domestic appliances, medium sort of MDAs and SDAs, the small and large domestic appliances together, those five are broadly sort of similar size. In the particular quarter, Gaming was a little bit bigger, but not much than those categories. If then we talk about the growth, where's the growth coming from? TV is actually the largest growth in the period. Gaming and furniture, similar growth year-on-year. Then MDA, the larger domestic appliances would be sort of third. Toys didn't grow because of the trading stance we took on toys and particularly combined with Black Friday and coming into Christmas, focusing on managing the margin. Sports equipment grew. It's not one of the biggest categories, but that grew strongly as well. Hopefully that gives you some color. Thanks, Kevin. Sorry. I was just going to say just one other point before we finish off on Argos, just on the online question, just going back to the detail again. One of the things just on that dynamic slot pricing, actually, we're very confident as we build the capacity by getting the slot pricing right across the grid that it's profit accretive. That dynamic model is something that we continue to improve but continues to drive the economics of the online slot capacity fulfillment. That helps, for example, things like the van utilization, which you see up 56%, because so clearly on the one hand, it doesn't look like a profitable delivery price, but it clearly helps the whole economics of the model. Sorry, can I just quickly come back to the pick rate? I recognize your point about COVID and social distancing, but structurally, all things being equal, so year out, two year out, so the medium term point, do you see much room for improving pick rates further, or do you now need to think about automating some of it or? I would just reiterate what we said in early November, which is the store pick model has absolutely proven the capacity it has to go from, as I say, 340- 835. That has happened through this period despite significant operational limitations in the lockdowns. As you would expect me to say, prioritizing safety is first and foremost, absolutely front of mind. As we go into another lockdown, that is one of the things that I think in these next few weeks will mean that we are not going to see immediate further improvement. I think beyond that, as we come through that period, just as we have done through the last six to nine months, you have seen how much it has improved. Given the initial impact on slide nine, how far it dropped back in the first lockdown, how much that improved through the summer. We'll get through this third lockdown. Then we think there's more to go at, and there definitely is more to go at. We think there's more to go at, fully optimizing the store model. As I said in November, we continue to look at other technologies, but right here and now, the way in which we're leveraging the asset base that we have by driving that degree of volume and improving the online metrics and setting route to do more of that is where we are. As opportunities of new technology comes forward, we'll keep looking at it. We think there's more to go at once we get through this initial further lockdown, Sreedhar. Thank you so much. Thank you. The next question is from James Grzinic from Jefferies & Company. Please go ahead. Happy New Year team. I had two or three very quick ones. The first one is, can you perhaps confirm what assumption you're taking in terms of COVID costs for the second half that underpin that new guidance for profit? I think you've spoken to GBP 290 million in half one. That'd be interesting. Simon, just to follow up on Sreedhar's points, can you perhaps confirm what the average delivery fee is now for grocery online, and whether you think that you can start widening the gap relative to Click and Collect? Can you perhaps also confirm where the average basket size sits for Click and Collect versus delivered for food online? Thank you. Okay. Let's maybe try and give just some specifics on the cost, and I'll reiterate some of what we talked about clearly in November. You remember when we talked about the cost in the first half, we talked about shielding, isolating colleagues was around GBP 70 million, safety and social distancing around GBP 110 million. I think, broadly as we guided to in November, of course, those costs continue to be very present in the business as we go into the third lockdown. We are seeing absence rates increase. Within obviously the guidance that we've given you today, we've taken account of the fact that we expect further absence than we would have seen a few weeks ago. We factored that into our guidance, particularly absence levels themselves and, of course, the cost of shielding for extremely vulnerable colleagues, too. That's in our retail operations and, of course, in our logistics operations as well. We factored into that a step up in absence. We're around 8% at this point in time. The last few days, we've seen a step up, and we clearly expect that to continue. We've got obviously a lot of colleagues in our business, given the amount of recruitment we've done this time of year. We're coming off the Christmas peak. we're factoring in the cost of absence and making sure we've got all the colleagues we need to provide the really safe shopping environment for our customers, great availability and online as well. That's really how we're thinking about the costs in terms of- James, just one other point, building on something. We'll update at the year-end the real detail on this, because clearly we just finished the trading period on Saturday. We'll come back with more detail when we do the full year numbers for you. Yeah. Sorry, can I just ask you, Simon, a follow-up on that. Are you basically assuming that the social distancing and shielding rules that currently apply will continue to apply for the rest of your financial year? Yeah, we are. I think that we've been really consistent on that throughout. Actually, for all the reasons you would expect me to say, as we've come out of Christmas, we've reset again, making sure that for all of our customers, in terms of what we're asking our customers do when they shop with us, that everyone wears a mask, that we're back to ensuring that two-meter social distancing absolutely is in place. Doing absolutely everything we need to do to make sure our colleagues feel as supported as possible. It's an anxious time, isn't it? I think safety is front and center in the way we are making sure we're set up. We're expecting all of the operational approach that we had to continue, certainly for the balance of this year, for all the obvious reasons. Yeah. Thank you. On your questions on relatively different prices, I don't really have a lot more specifics to share on that today. I think we've tried to give you as much color of the way we're thinking about item pick rate, the way we're thinking about drop density. As I say, the dynamic slot pricing and the way we do that, it's profit accretive and the way we optimize it. We'll continue to give as much color as we can on the online piece. When we come back at the prelims, we'll talk more about how that's embedded down post-Christmas. That's probably about as much as I can say on that on this point. James, there's no big noticeable difference between a basket in Click and Collect and a basket in home delivery. That's not what drives. It's just what's convenient for the customer and what's available. The basket sizes are similar. That's very clear. Thank you. Thank you for providing all that incremental granularity on those KPIs. It's very helpful. Thank you. Thanks. Thank you. The next question then is from Andrew Porteous from HSBC. Please go ahead. Hi, Andrew. Hi. Morning, guys. Happy New Year to you all. Three from me, if I may do. Could you just give us an idea in terms of the sort of GBP 60 million upgrade today, the relative importance. Sorry. Yes, sorry. Someone called me at the same time. Which parts of the business have done the heavy lifting in terms of Argos- Yeah, sure. versus stores, versus clothing? Yeah. The second question, could you give us an idea if there's any moving or anything to consider from a cash perspective this year, given the stronger performance and the better profit outlook? Lastly, a quick one on online. Could you remind us how many stores you do home delivery from, and how many you offer Click and Collect from? Thank you. Let me try and give you some sense on the, first of all, key drivers of the change in guidance. I think as you would expect, the primary and most significant one has been, clearly as we come through the second lockdown and the change in the tiering situation before Christmas, that's driven more demand on the grocery business. We've seen as more customers have clearly needed to buy groceries to be at home, to work at home, Christmas arrangements have changed. We've seen that drive more demand on the grocery side. Obviously, we'd planned a good sense of that, but it's been ahead of what we expected. That's been, by far and away, the biggest factor. Obviously, the arrangement changes just before Christmas, on the 19th of December, caused millions of families to have to reappraise their Christmas plans. We saw, particularly in the five days before Christmas, the impact of that. The 21st of December was the biggest day. Never seen that before. It was a real shift in the Christmas trading pattern. We saw both grocery overall drive performance ahead of what we forecasted. We also saw our stores in London and the Southeast before Christmas overindex, given the impact of the Tier 4 arrangements. Obviously, Lockdown three this week, we've seen some uptick in demand, not surprisingly, again, as customers need to buy in for the lockdown, when we factor that into our guidance. Of course, we had prepared for a worst case Brexit. Obviously, as the good news of that situation changed, we've been able to factor in the contingency that we had assumed for that. On the food side, I would say that demand, the Southeast impact post Tier 4, and the impact of the lockdown are the key components, the Brexit contingency. The other factor I would put out is that we've talked all the way through about the Argos business. We were working on the premise that some of the sales would've been pulled forward. In the end, the Argos business continued to do, as you've seen, really well through the Christmas period. That was another key factor in what we've been able to announce today. On the cost side, I'll ask Kevin in a minute just on the cash, but clearly we've had better full price sales across general merchandise and clothing. A lot of the seasonal products just sold through very cleanly. Just an example of that, in our stores for Christmas, products like Christmas decorations, Christmas trees, all of those products just sold through ahead of Christmas, and we were left with no stock afterwards, and that applied in a lot of the seasonal areas. As I've described, the online efficiency continues to improve, it's an area that continues to help the cost position. That would be the overall picture in terms of the key factors that have driven it. Grocery first, Argos demand, the impact of the tiering across the board, then the Brexit situation. On the store split between delivery and Click and Collect, we offer Click and Collect in 330 of our stores now, and we pick from 268 of our supermarkets. Andrew, just picking up your cash point. We're in a good position on cash and working capital. Clearly, it's a trading update today, so we don't have all the detail, but we finished the trading period with a clean stock file, which is always good. As we said at the interims, we expected a lot of the working capital benefits on the first half to unwind. Some of it always does unwind, because we're building up stock for Christmas. Particularly as we rebuild the general merchandise stock, where we've had very strong sell through at Argos, we'd expect that some of that will still happen because we will rebuild some of that stock. It will just depend a little bit on the trading patterns. We expect to be in a good position from a working capital position and from a cash position at year-end. Brilliant. That's really helpful. Can I get one quick follow-up on the Click and Collect side of things? Yeah. That's probably a bit more constrained by the 330 than the home delivery is in terms of customer demand, because I guess you're effectively asking customers to do the longest stem. Does the increased popularity of Click and Collect change your thoughts over how many stores you pick it from? Yeah. Just to go back on what's happened this year, and obviously we've added a very substantial number of new Click and Collect locations this year, including not just in stores we pick from, but also stores where we don't pick and we're offering Click and Collect. For example, my local store in York, in Monks Cross, we don't pick in that store, but we now offer Click and Collect, and that's been really well received by customers, and there are clearly a high number of stores that are in that operational circumstance. I think two things are driving us here. The first thing is, we clearly add more pick stores as the capacities happen, but that's been a relatively few number of locations. We've added about 15 extra locations to pick in this year. That gives us one more capacity, but also balances the volume of product going out the back of the door versus out the front of the store so that the customer experience is maintained. We'll continue to look at more locations we can add Click and Collect. To your point, for obvious reasons, if it works for customers and it works for us, it's absolutely right that we get to as many locations with Click and Collect as we can. I think we'll evaluate the Christmas picture as we get further into reviewing what's happened over the last four or five weeks. We're pleased with how Click and Collect has performed, and we see opportunities to continue to grow it. Thank you. The next question comes from Clive Black from Shore Capital. Please go ahead. Hi, Clive. Morning. Morning, Clive. Good morning, gentlemen. Morning, Simon. Happy New Year to you. Very well done. A couple of questions then. First one is quite particular, but you mentioned Brexit there for the first time, which is very refreshing not to have to over talk about it, Simon, but is the situation in Northern Ireland one that's concerning you, and could it be notably costly in your Q4? Secondly, I guess more for Kevin, but noting what you said about being ahead on profit expectations, I would imagine very strong negative working capital. Kevin, do you think there's scope to actually bring forward your deferral of debt reduction targets, which you set out to 2023, when we talked to you in May? Thanks, Clive. Okay, let me give you a sense of how we're thinking about Northern Ireland and then I'll pass to Kevin. I I think, as you, Clive, the key thing here is clearly how pleased we all are that a deal was reached before the end of the year. Because whilst we had clearly contingency plans in place for a no deal, clear the disruption that would have caused, we'd be in a whole different situation. The first thing to say is that, flow of goods into Northern Ireland, seven days into this, it's broadly going as we need it to. We've got products available for customers. We planned really closely with our suppliers over a very long period of time. We've made robust plans and there's been minimal disruption to supply so far. There's been individual small examples, in the grand scheme of the level of change that we've seen happen, Clive, if I look from a customer point of view in the 13 stores in Northern Ireland today, the vast majority of our products are there and we're working through making sure that some of the issues we need to work on in the next three and six months. We've got to work through Export Health Certificates in through the grace period. We've got to work through the prohibitive and restricted items in the next three months. Those things are all in front of us still to do. There's bureaucracy clearly associated with that, but we're working with all the right parties in the right way, actually across the industry to face into it. Look, it's early days. The most important thing is customers in Northern Ireland could get the products they should expect, and that's where we are. We put some contingencies in place to make sure that products were available in event of a no deal. We'll continue to review that, and we're very close to making sure that the right conversations are happening. Because as you say, we can't afford to put any cost into the operation at this time, and we'll be working really hard to make sure that's not the case. Kevin? Yeah, Clive. There's a few moving parts here, Clive. Clearly, the reality is we do have to repay the GBP 440 million of rates that was in our original thinking. That's obviously going to drag on the debt repayment. We will see a benefit from the increased profits, you're absolutely right. That's GBP 50 million-GBP 60 million that we should see which should ease into it. On the working capital, it's just a bit soon to say where that's going. We clearly have targets and we'd like to hold some of that working capital benefit, most of it will unwind. Better if I update you at the year-end when we fully analyze the numbers, the profit number will definitely flow through. Okay. Thank you for that, guys. Then Simon, just more broadly on Brexit, there's a lot of noise and uncertainty around country of origin of products coming into the U.K. and various ingredients that are utilized from Europe and then manufactured in the U.K. Is that something that is also worrying you and worrying the industry? Yeah, no, thanks, Clive. I think as you say, some of these factors have clearly become clearer since we've seen the detail of the agreement, and particularly, as you say, products and the origin of where they're processed is one of the things that we're working through. If I was to describe at the headline level, we've got to iron out some of the remaining issues around the Northern Ireland issues as we've just talked about. Of course, we've got to work through on particularly the issue that you've talked about, and we've got the right conversations happening across the industry to make sure that we can solve the issues. There will be changes we'll need to make as a result. We haven't got to all of those answers yet. Our priority right now has been stock availability for customers. Over the next two, three months, these issues about where we're bringing products in from, what the impact of that is, and how do we reset that where we need to is going to be a key priority for us to work on. I should just lastly say that for our teams in supply chain logistics particularly, in technology and in the trading functions, it's been an incredibly busy time right up until the new year. These issues were being worked up right up until the last few hours prior to the 31st. Having got that in place for customers, we now need to turn our attention to the issues that you're talking about, and we will be. Yeah, I think that was Michael Gove's plan all along, wasn't it? Not have enough time to work out anything. Anyhow, well done on your trading statement and all the best for the future. Thanks, Clive. Good to speak this morning. Thank you. Thank you. The next question then is from Xavier Le Mené from Bank of America. Please go ahead. Yes, good morning, gentlemen. Thank you. Thank you for taking my question. Good morning. Happy New Year to you. Two if I may. Just on the grocery performance, can you give us a bit of color on volumes, mix, and inflation potentially on what you see in Q3, and potentially what you're expecting heading into 2021? Second, you sounded a bit disappointed with the price perception improvement. May I ask why you think is that improving as fast as you think, and potentially what is the plan to improve that going forward? Yeah, thank you. Well, let me try and give some sense on both, and I'm sure Kevin might want to come in on the first point as well. I think just in terms of the overall position that we've seen, I think obviously, we've been very focused on value for customers throughout the quarter, and you'll remember at the interims in November, I laid out the action we've been taking, particularly in our fresh food business, particularly in areas like meat, fish, and poultry, and across our wider fresh food categories to bring better value to customers. We've been very focused on just continuing that strategy through the course, and we've seen the benefit in volumes. As we've particularly focused on improving value at the center of the plate, and we'll therefore have been significantly seeing the benefits of that in value perception in those areas. Value perception takes time to change, doesn't it? My comments on perception of value weren't disappointing, they were more just reflecting the fact that we've just begun a strategy to put food first, and we're very focused on improving the price perception of our customers, and we'll continue to do that, not least evidenced by the Price Lock we've just announced last Saturday with 2,500 everyday products on it. More broadly, in terms of the pricing environment, I think clearly sort of two things to say here. We didn't take part as extensively in some of the promotional activity in areas like beers, wines and spirits, and you can see the impact of that in the data I've shared on our relative value growth this morning. We did use other mechanics to give customers value. For example, the 10 times Nectar points that we used to encourage customers to shop early, we think was a really important and successful way in which we encourage safer shopping, bringing the capacity earlier, but also giving customers value through Nectar for doing that. We're very focused on value. We think broadly that the market will have been less inflationary in quarter three than in quarter one and two. We're bringing more value to customers, you'll see us continue to do that because to your key point, our strategy is to improve price perception. We're organizing all of our activity to make sure that we progressively continue to do that. Xavier, one thing I'd add on the inflation point, it is just hard to read at the moment. There's a lot of noise and changing in consumer shopping habits. For example, smaller turkeys for bigger turkeys. Where we saw in your mixed question, we saw growth in both own brand and brand, but we saw a mix into premium with stronger growth, for example, in Taste the Difference than in some of our less premium brands. We saw strong growth in things like premium champagne, et cetera. People wanting to treat themselves. That will have effect on some of the inflation numbers you see because obviously the average selling price goes up. If you like, it's good inflation, not bad inflation. Overall, the trend, as Simon said, is we're seeing both in the industry and in our business, lower inflation in quarter three than in the earlier quarters. On the volume question in more detail, we'll get Nielsen volume detail later today. We don't have that, which obviously we'll then analyze and get what we can from that understanding. Okay. Thank you. Thanks. Thank you. The next question is from Rob Joyce from Goldman Sachs. Please go ahead. Morning, Rob. Morning. Happy New Year to you all. Thank you. Thanks a lot. Three from me. First one, it’s a bit of an extension of an earlier question, but if we look at the full year, I think if we X out the bank and fuel, we’re looking at retail profits up somewhere in the region of GBP 2 million- GBP 300 million underlying. Are you able to give us the split of that between grocery and the non-food channels? That’s the first one. Second one is just on online. Thanks for all that detail. If we put it all together, are you able to give us an idea of what the cost to serve has fallen by in totality? In terms of GBP per basket maybe, or in terms of percentage on that basket? The third one is just looking to the future now. Given the shift to online, but obviously you’ve made improvements there. Do you think in a normalized growth environment, Sainsbury's is a fundamentally more profitable or less profitable business, in terms of margin than it was prior to COVID? Thank you. Rob, thank you. I want to try and give as much as I can, but on a couple of your questions, we won't be able to go a lot further than we said. I think on the guidance, as you say, we don't split it out between grocery and each of the product channels. I can't give you any more on that, I'm afraid. Kevin? No, I'm sorry, Rob, and it is a trading update as well, and we've finished trading on the 2nd. We don't share that level of detail, and we'll come back at year-end with a bit more color for you. Just on the online profitability point, in the first half we saw total cost per order down somewhere between 8% and 9%. We'll have seen an improvement on that. We don't have all the full analysis done, and again, we can update on that at the year-end. That would have improved a bit over the period. Yeah. To your third question, Rob, looking ahead, of course, you'll remember the comments we made in November in terms of the strategy, which very much is about as we put food first in our priorities and we really focus on delivering a return in each of our brands and we accelerate our cost saving plans. We're confident we can see through, once we get through this COVID period, the priorities that we described back in November. We're confident as we bring a greater focus on food, as we invest in the price perception that we've already talked about this morning, that will drive an increase in our primary customer base and therefore grow our ability to drive trade up. One of the comments I would just pull out from the Christmas period, again, it's really clear that customers have had a propensity again to trade-up this Christmas and to a large extent we've satisfied that, but we see opportunities to go further with that. As we get into the detail review of Christmas, we'll be looking at where else we can take the trade-up opportunity in some of the premium tier ranges as we grow the primary customer base. I think clearly the shift online, as you say, hugely significant. Who'd have thought back in March that we'd be here today talking about nigh on 20% of our grocery volume going through online now. As we've described through the call this morning, we're very focused on capacity and we're very focused on the operational metrics to drive the efficiency of the online model and at the prelims we'll give as much of a sense as we can of how much further that's moved and how we see it evolving as we go forward. I think we talked in November about the economics of the box overall. Our plans on Save to Invest are very focused on how do we deliver the most efficient online operations, but also, as the demand curve changes between online and store, how do we find efficiencies in the rest of the store as well? I think plenty for us to go at, but I think the priorities we've laid out, these three core priorities will give us a lot to deliver in the next 12 months in giving us a really strong start point in terms of delivering against the commitments we've made. Thank you. Really helpful. Just quickly, Kevin, on that 8%-9%, does that include the shift to Click and Collect? That's a blended number, yeah? Blended number, exactly. Thank you very much. Appreciate it. Thanks, Rob. Thank you. The next question then, it comes from the line of Nick Coulter from Citi. Please go ahead. Morning, Nick. Morning, Nick. Good morning. Happy New Year to you all. Thank you. Just two very quick ones, mindful of time. Firstly, could I ask for your sense of how much unfulfilled demand there is for your online offer at the moment, and whether you think perhaps penetration has broadly peaked for now, having gone through Christmas? That would be the first one. The second one would be just around, if I could check on the timing of the MFP investment that went in. From the data, it looks like you saw a very quick volume response to that investment. Thank you. Yeah. Thank you. I think on the demand picture, couple of things to say there. We've gone 340,700, 840 last week. There's still demand to fulfill. When you look at industry predictions post-COVID, the broad view is somewhere in the mid-teens. We're planning to be closer to where we are now than that. Of course, there'll always be certain parts of the U.K. where we need to have more capacity. There'll be other places where we can use what we have available still. We'll keep looking at where we need to add more in. The focus for us here is on the profitability of the online operation and delivering for customers as we come through this third lockdown, which inevitably creates a bit more of a spike. I think things will settle down a bit after that, and as we come through COVID, let's all hope by later in the year we'll get to a clear picture of what the kind of watermark is at that point in time. We're up 18% for this quarter. That's grown for the quarter. I'd expect us to be closer to that than the industry predictions overall. Nick, the only other point to that is the great thing is we've got the flexibility with very limited capital expenditure to flex up and down depending where customers go. Yeah. then on the- Sorry, you expect the raw proportion of the doubling effectively to stick, is what you're saying? Yeah. As I say, I think industry prediction is 15%, 16%. We're at 18% and growing. I'd expect to be closer to 18% than 15%. On MFP, what do we do here, just to reiterate. Back end of September, we began the work which really focused on how do we win the center of the plate. That was the core strategic objective that we began to answer, and we invested in price around 300 products in meat, fish, and poultry, as you say. As you say, we saw a volume increase. As a result, we saw a double-digit volume increase, which pretty much has sustained as a result of that. What we've done this week. Is that in November, though, that you put in the investment? I'm just trying to clarify the timing of the investment. We did the investment at the back of September, and we first reported on it in November. It took a few weeks to work through then, essentially, but you saw a very strong volume response? We saw a strong volume response, and just going back to the detail that we shared with you, if it's helpful, in November. What we did was effectively, we focused on meat, fish, and poultry, and we focused on what we were doing in terms of those core products that really formed customer perception of what we were doing on price. What happened was we dropped 300 products, actually, the first week in October, and we saw a volume uplift across meat, fish, and poultry between pre and post investment of 11%. In some of the key products, for example, mince 5% fat, we saw just under a 30% growth in the volume. Big pack chicken fillets, 10%. These really key high volume lines, we've seen the volume shift significantly as a result of what we've done there. This week, as I say, we've just launched our Price Lock campaign from the 2nd of January, 2,500 everyday products in that Price Lock. Again, meat, fish and poultry are an important part of that. We're very focused on this center of the plate point. How do we convert to more primary customers, and how do we use the work we're doing in this area to support that? Thank you very much. It certainly seems to have had the desired impact on your switching. Thank you. Thanks. Thank you. The next question is from Maria-Laura Adurno from Morgan Stanley. Please go ahead. Morning, Maria. Morning. Happy New Year to everyone. Most of my questions have been answered. One very quick question. Perhaps if you could comment on levels of absentees and where they stand and where you are in terms of potentially having to hire new people. Any comments would be extremely helpful. Thank you very much. Thank you. Just to reiterate where we are on absence. We're around 8%. We've seen, not surprisingly, absence increase over recent days for all the obvious reasons. Of course, we're paying a lot of attention to absence both in our retail operations in stores and online, and also in logistics as well. As you'd expect, given the third lockdown this week. We put in place all of the support for our colleagues who need to shield or for our extremely clinically vulnerable colleagues. All of that is in place, and that's factored into the financial assessment we've made of our costs in the balance of the year and in the guidance that we've given today. In terms of the resourcing in the business, the other side of your question, really, which is how do we make sure that we've got enough people to look after our customers? 172,000 colleagues are in the Sainsbury's Group business at the moment. We've hired significantly more colleagues year-on-year. We expect to exit this year with more colleagues in our business than we begun the year, for obvious reasons. A lot of colleagues are supporting the online operation. As we come out of Christmas, clearly, the impact of the third lockdown, clearly the impact of the increased demand in grocery and Argos, clearly the step up in online operations is making absolutely critical. The team are doing a brilliant job, just really focused on making sure we've got all the people we need to serve our customers, and making sure, obviously, we're supporting our colleagues that need, as I say, to shield. That's where we are on it, and I think focus is all about delivering for our customers through what's going to be a very challenging few weeks ahead for all the obvious reasons. Thank you. Hello. The next question comes from Tom Davies from Berenberg. Please go ahead. Morning, Tom. Morning, guys. Morning. Happy New Year. Just three questions from me. Given you guys look at the whole box, like the sales densities of the whole box. In a normalized environment, given that online will be less cash profitable than in in-store sale, what kind of incremental sales densities of the sort do you need to achieve in order for that store to continue growing its absolute cash profitability? Second of all, in terms of switching gains, who are you seeing the gains most from? Is it the discounters? Is it Asda? Thirdly, in terms of the Argos restructuring, what's the timeframe for this restructuring the model, closing the stores, and do you envisage any potential execution risks or supply chain issues when you change it all? Thanks. Thanks, Tom. I'll maybe pass to Kevin for the first one, and then I'll try and give some commentary on the Argos and on the switching. Tom, morning. You probably won't be surprised. I'm not able to answer that question in detail, and we wouldn't have hosted a trading update to answer it. We will come back and talk more about the box economics, because I know how important it is for you, and it's obviously something we spend a lot of time looking at. That level of detail, well, we're certainly not sharing today, and we need to consider just from a confidentiality and competitive point of view how much we share. We did say in the first half we had stores that had an Argos store-in-store grocery online and walk-in customers grew their sales by 18%, whereas grocery online on its own with walk-in customers grew their sales by 11%. If you had an Argos store-in-store, no grocery online and walk-in customers, we grew by 8%. You can see that as we put more offer into the store, we grow the sales very materially. That clearly increases the margin pool against a fixed cost base. We've got lots of work working on the various variable costs, and Simon's talked about the online levers, et cetera. It's a big focus for us and something we'll come and talk about in more detail in future sort of sessions. Thanks, Kevin. Then on the two other questions, I think just obviously in terms of the switching, we'll see the volume data when that comes through. I think the theme as we've seen through COVID, we've seen obviously many customers have been choosing to shop in larger supermarkets than discounters, certainly through the lockdown, and I think that theme's continued, borne out of the latest data that we've seen, obviously in different performances for the different discounters. I think the sort of key thing there that we have seen obviously growth and we've grown market share in food through this period, and inevitably some of the action we've been taking in areas like meat, fish and poultry, we think has been important in terms of beginning to address value perception and winning those baskets. We'll look at the data, obviously, when it comes through for the Christmas period itself, but on the way into mid-December, which is the last reported period, that was certainly the picture we were seeing in terms of the switching. I think in terms of Argos, just to reiterate what we laid out in November. We're beginning a three-year transformation program in Argos, which will see us clearly close the vast majority of the standalone stores, open more Argos store-in-stores inside Sainsbury's supermarket, selling and collection points, both in supermarkets and in convenience stores. We're well on with the program of planning this for the first year. Clearly, it's predicated on getting the local fulfilment centre network up and running, and we're planning the first phases of that. The point I would just want to make and acknowledge is the fantastic job our colleagues in Argos have done through this period. We announced these significant changes at the beginning of November. The way in which the Argos team have led and delivered Black Friday and this Christmas has been absolutely outstanding. We're on with planning the changes. Obviously, we're very focused on the demand in Argos at the moment, and making sure that we support our colleagues, and look to redeploy as many of our colleagues as we can as we begin to deliver the transformation plans that we've talked about. I think we've got three of the LFCs up and running already. Of course, we'll be balancing closely, making sure we're delivering customer availability, a strong customer offer in Argos at the same time as delivering the changes that we've begun. Brilliant. Thanks. Thank you. Thanks, Tom. Thank you. The next question is from James Anstead from Barclays. Please go ahead. Hello, James. Good morning. Happy New Year. Thank you. Two quick questions. Firstly, you mentioned you were very pleased with this 10 times Nectar point scheme to smooth demand in that week up to Christmas. Is that a mechanism you could imagine using more widely to smooth demand? Is it really only the extreme volumes around Christmas when that's likely to come into play? A question just to Kevin as well, probably. The one number that perhaps caught me cold this morning was the jump in the net new space contribution to be quite noticeably negative this quarter, which I guess is the fact you've permanently closed quite a few of these Argos stores from November. Is a 2% hit per quarter a sensible sort of assumption for quite some time to come now, given you're planning to shut most of the Argos estate, or might it even get a bit higher for some time? Shall I just pick that one up? James, you're right. The 1.8%, it's 148 stores, which we treated as open up until Q2, albeit they weren't trading, but they hadn't officially closed. We've treated them as closed, and that's what's driving that difference that you see as you go from Q1, Q2, into Q3. We'll need to come back and give you a bit more help. I wouldn't want to give you guidance now that we haven't checked, but we'll come back and help you plan for as we do the store closures as we finalize those plans over the next period of time, if that's okay. James and I will help you with that. Yes, I suppose just one quick follow-up then. You've treated them as essentially closed from the start of the third quarter rather than- Correct. middle of November. Okay. That's helpful to clarify that at least. Yes, that's helpful. Thank you. Thanks, Kevin. Just come back to your question on St. Thomas. I think just the genesis of this was really all about at the planning phase of Christmas, James, how could we manage what was a very uncertain set of challenges around capacity in supermarkets and very thoughtful about the impact of social distancing. The team did a really great job looking at different approaches we could take to bring forward some of the demand, particularly in those areas of the product base on grocery and ambient products where that was going to work. This was driven out of an objective of safety and smoothing the customer demand curve, and the reason that we did it. As you say, look, as part of our review of Christmas, we'll have a really good look at how it's worked. We're pleased with it. Customer feedback's been good. It's enabled us to pull forward sales in these areas, which has opened up the capacity to be able to put more of the perishable product through the pipe just prior to Christmas. I think it served a number of objectives. Safety, first and foremost, balancing the customer flow into stores, which was something that was very much on our minds when we couldn't anticipate how the peak four or five days to Christmas would be. Clearly using Nectar to reward customers for shopping early, and enabling us as we look ahead to find ways of further optimizing the peak days before Christmas. They were the factors that went into it, and yeah, our early assessment of it has been successful. We'll do the full wash up on it and look for further applications from that. Very helpful. Thank you. Thanks, James. Thank you. That completes the queue of questions. I'll pass back to Simon for closing remarks. Thank you. Well, just to thank everyone this morning for joining us at short notice. Very conscious that we pulled our update forward today. Thank you for your time. Thank you for all your questions, and I hope we've been able to answer them as fully as we can. Just to finish by saying, obviously a huge thank you again to all of our colleagues for the fantastic job they've done and to our suppliers, too, actually. Our suppliers have worked incredibly hard to support what's been a very challenging period. A big call out to them. Thank you to you for your questions this morning and to say, of course, we'll talk again at the end of April for our preliminary results. We're very focused on our strategy, our three core priorities, which we'll update you more on then in terms of progress. Thanks for joining today. Stay safe and talk soon. Thanks, everyone.