It's not a dish that Sainsbury's sells, but Justin King is tasting revenge
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Thursday 12 June 2014
Outlook Good on Justin King for dissing his rivals in his final days in the job. Like all modern day chief executives, he more usually trots out the platitudes about "we welcome competition" whenever asked about his fellow grocers.
So his valedictory sideswipes yesterday made a refreshing change, and set him up nicely with a tough-talking, as well as smooth, reputation for that next big corporate job we all expect him to land. Terry Leahy, he declared, was a short-termist, his management team knew the game was up and were just biding time until they were kicked out, and Tesco had no decent succession plan.
It seems harsh to accuse Sir Terry of failing to look to the future during his 14-year regime. After all, he opened what became giant businesses around the world – some as big as Sainsbury's is now – and extended the lead of by far the biggest supermarket chain in Britain. But, towards the end of Sir Terry's time, perhaps Mr King has a point. The UK stores were badly suffering a lack of investment, while big decisions about foreign campaigns gone wrong were unforgivably delayed. Meanwhile, the exodus of management under Philip Clarke does hint at a top team thumb twiddling until their golden farewells.
However, such departures are entirely normal when a long-serving boss quits. They're one of the main reasons investors get twitchy and share prices fall when a half-decent CEO signals his departure. So don't be surprised to see the same flurry of exits at Sainsbury under Mike Coupe.
Edison Research points out that one of Mr King's other right hooks at Tesco was a more subtle one. Boasting of how wonderful Sainsbury's customer service was, he pointed out that its shelves had "strong availability throughout the day". Edison says this is a veiled attack on Tesco, and, if you've tried shopping there on the way home from work lately, you'll know what they mean. The broker Espirito Santo has just highlighted this issue too, particularly with regards to fresh produce.
It all brings to mind a bit of research in bygone days by that much-missed City retail analyst, the late Richard Ratner. He got his underlings at stockbroker Seymour Pierce to "walk the floors" of branches of a major supermarket chain in a "mystery shopping" experiment to prove his theory that stocking at stores was in crisis. Shelves were empty – Ratty was right. For all the millions the company had invested, its logistics IT was just as risible as he'd suspected.
The identity of that grocer? A certain J Sainsbury, not long before Mr King's arrival. He was lucky that the disastrous IT system – so central to the company's gloomy times before him – was just getting fixed when he arrived. High-ups at Tesco mercilessly mocked Sainsbury's troubles at the time. Perhaps Mr King had that in mind yesterday.
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