UK supermarket group J Sainsbury has said that its 2004/05 profit will be lower than expected and announced that Sir Peter Davis has stepped down as chairman of the company.
The group said that for the first quarter of the 2004/5 year, covering the 12 weeks to 19 June, total sales growth for Sainsbury’s stores including petrol was 1.9% for the quarter compared with 0.8% in the fourth quarter of last year. On a like-for-like basis, sales were up 1.0% compared with –0.9% for the fourth quarter last year. The company said buoyant trading in petrol boosted its sales performance.
Sainsbury’s said its move to lower prices was resulting in lower margins. The company said it is also implementing a number of specific measures to improve on-shelf availability in its stores, including the deferral of a planned depot closure and operating with higher than average wastage levels. In addition, the company said it is aggressively trading out of its over stocked position in non-food goods.
“These additional measures will also negatively impact margins. As a result, underlying profit before tax for 2004/05 will be significantly below consensus market forecasts with the majority of the impact expected in the first half,” the company said.
J Sainsbury also announced that Davis has stepped down as chairman and as a director of the company, and will be replaced by Philip Hampton, who will join the board and take up his new role on 19 July 2004.
Earlier this week the Financial Times reported that Sainsbury’s could face a massive shareholder revolt over its decision to award around £2.4m (US$4.3m) of shares to Davis last year despite a poor performance by the company. Davis was awarded 86% of the maximum shares allowed, and shareholder groups were demanding that he either returned part of the bonus or gave it to charity.