COMPANY OF THE WEEK: J Sainsbury

J SAINSBURY said it will cut 1,100 store-manager jobs and broaden its product range after intensifying rivalry from Tesco hurt profit. The shares rose 2.2 per cent on the news, although they have fallen 19 per cent in the past six months.

Chief executive Dino Adriano is reshaping the supermarket chain to win back customers who have deserted to nimbler rivals. He plans to cut pounds 160m in costs over three years and spend the money revamping the range, refitting stores and cutting prices.

"I am pretty sure they will be able to deliver the cost savings," said Ian Macdougall, an analyst at Williams de Broe. "The question mark must come over the top-line sales performance. It is a nasty, tough industry and will take a lot for Sainsbury to claw its way back."

"Our cost-reduction programme will give us the necessary headroom to break the cycle of declining market share with the associated impact on profit," Mr Adriano said. "The sales benefits of the reorganisation will flow through in the next one or two years."

The new approach at Sainsbury's was underlined by the departure of Sir Timothy Sainsbury, 66, the last remaining member of the founding family on the board. The company said he is resigning as non-executive director, though he will remain a major shareholder. The family holds about 37 per cent of the shares.

Mr Adriano aims to generate pounds 40m in savings this year, and pounds 100m next year. The company has promised to deliver same-store sales-volume growth by the end of this year and growth above the industry average next year. Mr Adriano said Sainsbury's will extend its economy range, although it won't make price its main focus. "We are not going to pursue the lowest price in the market place," he said.

The company's lack of higher-margin general merchandise has driven shoppers to Tesco and Asda, and limited its scope to cut the prices of food lines.

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