Struggling Sainsbury's plans 'return to strengths'

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The Independent Online

Sainsbury's today pledged to recruit 3,000 shop floor staff as part of a strategy aimed at growing sales by £2.5 billion over three years.

Sainsbury's today pledged to recruit 3,000 shop floor staff as part of a strategy aimed at growing sales by £2.5 billion over three years.

Under the banner Making Sainsbury's Great Again, chief executive Justin King declared his intention to take the retailer back to its strengths with a primary focus on food and a drive to keep shelves better stocked.

As well as the extra staff, workers will be offered a new bonus scheme to reward them on store standards and availability of products. In a bid to cut costs elsewhere, around 750 head office jobs will be lost by March.

With the company believing profits can be improved through sales rather savings, Sainsbury's will invest £400 million on its offer to customers.

The need for an overhaul was highlighted by forecasts from Sainsbury's showing underlying profits for the first six months of its financial year would be down by two-thirds at between £125 million and £135 million.

It said the performance in the second half was unlikely to be different and would lead to a 50% reduction in the full-year dividend paid to shareholders, including the Sainsbury family.

The cut should enable the supermarket to save £135 million towards its restructuring, which is expected to cost £550 million in exceptional charges - a factor that will lead the company to a bottom-line loss this year.

Mr King told the BBC Radio 4 Today programme: "We wrote to one million customers and got replies from a quarter of a million, and what they said was they wanted to see us going back to what made us great, and that is fantastic quality food at fair prices.

"We think we can deliver both. We can deliver much better quality and we can also deliver lower prices than we do today."

Mr King said he was encouraged by the fact that 14 million people continue to shop at Sainsbury's despite its difficulties.

"It means that, despite the fact that we have been letting our customers down, they are still visiting us, but the basket size is down because we do have significant challenges with availability," he said.

He added he believed the Sainsbury family would support the revival plan.

"I am very confident that those shareholders who are committed to the business in the long term will be very supportive of this plan," said Mr King.

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