J Sainsbury PLC on Wednesday promised ‘enhanced returns for shareholders’, including a commitment to a progressive dividend policy and plans for a £200 million share buyback.

The London-based supermarket chain made the commitment on returns as it set out is ’next level Sainsbury’s’ strategy, which it said builds on the ‘food first’ programme that it launched in November 2020. The new strategy aims to make grocery market volume share gains, while still building on the range offered by general merchandise arm Argos.

Sainsbury’s shares were down 3.6% at 265.60 pence early Wednesday in London.

Sainsbury’s said it will commit to the progressive dividend policy from the start of the next financial year, and the share buyback also will take place over the course of that year. The company’s current financial year ends on March 2, and it will release full-year results on April 25.

Sainsbury’s paid a 13.1 pence per share dividend in financial 2023, unchanged from financial 2022. It paid an interim dividend of 3.9p for the current year, also unchanged on a year before.

Funding the payouts, Sainsbury’s said it continues to forecast retail free cash flow of at least £500 million per year and added on Wednesday that it now expects at least £1.6 billion over the next three years.

In terms of operations, Sainsbury’s said its new strategy aims for food volume growth ahead of the overall UK grocery market. At the same time, it will aim for £1 billion in cost savings over the three years to financial 2027, expecting to take £150 million in one-off costs related to those savings over the next three years.

The company said it will increase capital expenditure to between £800 million and £850 million per year over the next three years.

Sainsbury’s also will make an additional £70 million investment in its electric vehicle charging network, Smart Charge, in financial 2025.

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