J Sainsbury generated like-for-like sales growth of just £5,907 per store across its UK supermarket chain in the six months to 11 October, it emerged yesterday. The grocery chain also disappointed shareholders by announcing a 2.5 per cent increase in its dividend on the back of underlying profits growth of 7 per cent.
At its preliminary results earlier this year Sir George Bull, the chairman of Sainsbury, said it was the directors' intention to deliver double-digit profit growth and dividend growth of 5 per cent.
However, the lower-than-expected dividend did not stop the shares ending the day up 4.55 per cent at 298.25p after the company named Justin King, a director of Marks & Spencer, as its new chief executive. It also promised that an overhaul of the business being undertaken by Sir Peter Davis, the outgoing chief executive, would be complete by the summer.
Sainsbury's like-for-like sales in its main supermarket operations grew just 0.1 per cent in the first half of the year. The figure is a crucial tool used by analysts to measure the core, organic growth in a retailing business. "The like-for-like figures were disappointing," said Sir Peter. "We are addressing that. The problem was caused by the disruption resulting from the changes being made in the business."
The group continues to lose market share to its rivals. New research from TNS shows that Sainsbury's share of the market fell to 16 per cent in the 12 weeks to 9 November, from 17.4 per cent a year ago. Sir Peter has overseen a shake-up of distribution systems that have led to a shortage of certain items in its stores.
Sir Peter, who will step up to chairman in March, was yesterday given a vote of confidence by the Sainsbury family, which owns 35 per cent of the group's shares.
The family said the company was now much better equipped to compete thanks to Sir Peter's efforts.
The group, which also has operations in the United States, announced total sales of £9.8bn, up 1 per cent, and profits of £366m, up 7 per cent. The appointment of Mr King was widely welcomed by shareholders. He is a protégé of Allan Leighton, the chairman of Royal Mail and the man who ran Asda alongside Archie Norman in the 1990s.
His attraction to Sainsbury's is that he spent seven years at Asda between 1994 and 2001 and then moved to Marks & Spencer where he was chief executive of the food division.
Sainsbury's hopes his experience at both the value and upmarket ends of grocery retailing will serve it well.Reuse content