Jeremy Warner's Outlook: Is Woolies still worth anything at all?

More bad news from the high street. After stripping out inflation, there was virtually no growth at all in like-for-like sales at Sainsbury in the 12 weeks to 14 June, despite what Justin King, the chief executive, calls "strong growth in non-foods". Sainsbury is facing much tougher competition from a resurgent Morrisons and Asda, but the main cause of this relatively poor performance has to be attributed to the consumer slowdown.

If things are looking grim for Sainsbury, they are dire for Woolworths, which seems fast to be approaching the end of the road. Already a penny stock, one broking house thinks the shares completely worthless.

Out goes Trevor Bish-Jones, always an odd choice as chief executive, after warning of a further deterioration in sales and margins. It ought to be possible to make something of the 800-plus chain of stores, but, in six and a half years of trying, Mr Bish-Jones has taken them absolutely nowhere.

If there was a target market, it seemed to be sink-estate single-parent mothers. The variety store format was unconvincing and out of date, and even the pricing proposition failed to position the stores firmly within the discount category. Possibly nobody could have done any better. Certainly it is true that Mr Bish-Jones was dealt a lousy hand.

When Woolies was demerged from Kingfisher, it came stripped of virtually all its freeholds and piled up with debt. In the current, challenging, retail environment, the leaseholds are more a liability than an asset, though Mr Bish-Jones has managed to offload some of them to Waitrose for cash.

The joint venture with the BBC and the Entertainment UK distribution business are deemed a success, but they are far outweighed by the company's failure to find a meaningful position on the high street for its core retail chain. Even the name means little to younger generations. Unlike its American and Australian cousins, the UK Woolies has failed to reinvent itself as something other than the original penny-bazaar concept. Investors are paying the penalty.