J Sainsbury admitted it was not satisfied with its sales performance as its trading figures showed it is continuing to lose market share to Tesco and Asda.
But Sir Peter Davis, the supermarket group's chief executive, insisted progress was being made saying: "We've got to hold our nerve. I am confident sales will improve."
Sainsbury's like for like sales in the core UK supermarkets division in the 12 weeks to 21 June, were up by just 0.3 per cent while Tesco's climbed 5.8 per cent. Disappointment at this figure was intensified because of an estimated £2bn that Sir Peter has invested in the business since his appointment three and half years ago.
Analysts now believe it will be only a matter of months before industry data shows that Asda has overtaken Sainsbury's to become Britain's second biggest supermarket group. Philip Dorgan, an analyst at WestLB Panmure, said: "The company remains in denial about the flaws in its business."
Another analyst, who asked not to be named, said: "There is impatience for change. It just ain't working."
But Sir Peter was defended stoutly by the company's chairman Sir George Bull at the the group's annual general meeting in central London yesterday. Sir George said: "We are currently two thirds of the way through the [recovery] programme and we are achieving traction. The board is confident that the benefits of the programme will increase in pace during the next 18 months."
Sir Peter was confident he will see his plan through to fruition despite the recent barrage of criticism he has faced along with persistent rumours that the Sainsbury family, which owns 35 per cent of the shares, may be losing patience.
"The family ... remain very committed to our management and to the company," Sir Peter said. "There are no plans that I'm aware of for them to reduce their holding."
Sir Peter claimed Sainsbury's first trading figures were hampered by strong comparisons last year when sales were boosted by promotional activity during June. A relaunch of own label non-food lines in September would help, he said.
Shareholders used Sainsbury's AGM to question a controversial bonus scheme Sir Peter Davis will receive when he steps up into the chairman's role next March.
He is due to receive as much as 1.5 million shares - currently worth £3.7m. One shareholder asked why part of the bonus was dependent on Sir Peter hiring headhunters to find a new chief executive as well as someone to take over the chairman's seat when Sir Peter himself retires altogether from Sainsbury in July 2005.
Alan Perryman, a shareholder, asked: "Why should Sir Peter be rewarded for what is a key responsibility for any chairman?"
Sir George, who will retire as chairman of Sainsbury next March, denied recent rumours that the company had not drawn up a preliminary shortlist of potential candidates for either of the posts, and said the nomination committee would look inside and outside the company.
Despite the controversy over pay, shareholders representing more than 92 per cent of shares voted for Sainsbury's report on directors' remuneration.
Sainsbury was nonetheless keen to emphasise that Sir Peter, who is contracted to stay at Sainsbury until July 2005 to oversee the completion of his revival strategy, would step down earlier if the new chief executive wishes him to do so.
Keith Butler-Wheelhouse, chairman of the nomination committee, said: "Sir Peter will disappear if he is an embarrassment in any way."
The shares closed 4.5p lower at 260p.Reuse content