Sainsbury’s boss Mike Coupe admitted today that a quarter of his stores are failing and 40 planned openings have been postponed as he focuses on tightening costs.
Shoppers will benefit from a £150 million investment in price cuts, but shareholders will suffer a dividend cut this year. This sent the shares down 4.5 per cent to 257p.
The revelations come as the UK’s third-biggest supermarket slipped into the red following a massive £628 million property writedown, as the chief executive unveiled his vision for the future of the business.
Coupe claimed he had inherited a thriving retailer from predecessor Justin King, who helped record nine years of growth, but cracks started to appear in his legacy as sales for the last six months fell 2.1 per cent on a like-for-like basis, with total sales down 0.1 per cent at £12.7 billion.
Sainsbury’s recorded a £290 million pre-tax loss for the six months to the end of September, although underlying profits were down 6.3 per cent to £375 million before the huge writedowns are taken into account. The boss, who replaced King this year, conducted a full-scale review of the business and discovered that 25 per cent of stores were either the wrong size or in the wrong location.
He said more non-food products will be fitted into extra space, including its Tu clothing range, along with kitchenware. Other struggling stores will be filled with concessions including the roll-out of more Jessops camera stores.
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Coupe also vowed to strip millions from the company, including a £150 million price cut this year and £500 million of operational cost reductions, which are likely to include job cuts and squeezing suppliers, while its capex budget for new stores and upgrades will be halved to around £500 million a year.
Convenience stores and online have seen customers desert out-of-town superstores. However, Coupe insisted the larger sites still had a part to play in the business.
He said: “We’ve seen a lot of coverage about the death of the superstore and I think that’s grossly over-exaggerated. The majority are still shopping in big out-of-town stores, but that will be where the business is squeezed.”Reuse content