The company said it would shed 10 per cent of the 3,000 staff at its headquarters in Blackfriars, London, at a cost of around pounds 30m. The redundancies will yield a saving of pounds 60m in 2000.
News of the job losses came as Sainsbury's revealed that increased competition and the failure of its "Value to Shout About" advertising campaign featuring John Cleese had caused a slump in sales in the second half of the year.
Dino Adriano, the chief executive, admitted that the slowdown in sales growth would widen the gap with the market leader Tesco. The disappointing second half led to an increase of just 2.2 per cent in like-for-like sales over the year, compared with Tesco's 4 per cent.
The last three months were particularly sluggish, with comparable sales rising 2.4 per cent, well below Tesco's 5 per cent. Excluding the effects of an early Easter, sales rose only 1.2 per cent.
The sales debacle meant Sainsbury's completely missed its target of growing volumes by up to 2 per cent in 1998, posting a rise of only 0.5 per cent. Overall, total sales in the group, which includes the do-it- yourself superstores Homebase and the US chain Shaw's, rose 4.9 per cent to pounds 16.3bn.
Mr Adriano said profits for 1998 will meet market expectations of around pounds 760m. However, he warned that the supermarket chain's troubles will hit the 1999 figures. His comments prompted City analysts to slash forecasts for this year by around 9 per cent to pounds 750m.
However, the shares soared 15.25p to 390.25p on speculation that Sainsbury's could be the target of a takeover by the US giant Wal-Mart following the proposed Asda/Kingfisher tie-up.
Mr Adriano admitted the supermarket's performance was not "acceptable" and said the group would spend pounds 30m in 1999 and 2000 to improve its sales growth. "We have to work to become leaner, fitter and faster in responding to changes," he said.Reuse content