Sainsbury denies plans to quit US
Wednesday 20 May 1998
Sainsbury said the decision did not mean that it would sell its Shaw's business on the east coast of America. It also denied that the impending retirement of Lord Sainsbury, the group's chairman, who has been a keen exponent of the expansion of Sainsbury in the US, might lead to a change in strategy. "David was party to the discussions," a spokesman said.
Dino Adriano, Sainsbury's chief executive, added: "Taking control of Giant was a desirable but not essential element of our US growth strategy. We believe that Sainsbury can add value in the US food retail sector and are focused on improving Shaw's performance."
Sainsbury's shares rose 24.5p to 515p on the news, as analysts took the view that a complete withdrawal from America was now more likely.
"The UK investment community would prefer Sainsbury to be out of the US," said Philip Dorgan at Panmure Gordon. Other analysts asked whether some of the proceeds might be returned to shareholders; Sainsbury said it would invest the cash in the business.
Shaw's operating profits fell 5.2 per cent to $61.8m last year, due to a strike that affected first-half earnings and losses at stores in Connecticut.
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