If there is such a thing as a seven-year itch for a FTSE 100 chief executive leaving companies, Justin King has not felt it. After joining the UK supermarket on 29 March 2004 when it was on its knees, the ebullient chief executive of Sainsbury's seems as enthusiastic about growing the grocer as ever.
Asked about the prospect of taking another job in or outside retail, Mr King gives the sort of unequivocal answer that will reassure colleagues and investors at Sainsbury's, where he has turned around sales and profits.
He says: "There is no retailer anywhere in Europe, as far as I can see, if not the world, with a greater growth story to tell and why would I not want to continue to lead that?"
Certainly, Sainsbury's has aggressive growth plans across the business. These cover non-food products, online sales and a rapid programme for new stores and extensions, which has been fuelled by £432m made in fund raising in 2009. The grocer currently has 937 shops but will have more than 1,000 before the end of 2011.
However, a slowdown in consumer spending this year has hit the sales momentum at Sainsbury's, as it has at rivals Tesco, Morrisons and Asda. Last month Sainsbury's posted like-for-like sales, excluding fuel and including VAT, up by just 1 per cent for the 10 weeks to 19 March – one of the grocer's weakest performances for several years,
Despite this slowdown in growth, the City expects the grocer to increase pre-tax profits by 8 per cent to £661m in 2010-11. Mr King blames not only the downbeat sentiment among consumers but the impact of record fuel prices and, to a lesser extent, the rise in VAT for the "quite dramatic" slowdown in consumer spending this year.
He said: "The consumer outlook – 'do I expect it to get better in the next period of time?' – is as downbeat as it has ever been." Mr King said that over its last reported 10 weeks Sainsbury's had been hit by the effects of a 16 per cent rise in fuel prices, which added £5 to the average petrol tank fill. Reflecting the tough trading conditions, the average level of products on promotion in the grocery sector is now running at an all-time high of about 40 per cent.
But Mr King believes this proves that big branded manufacturers have been too aggressive in raising prices. He says: "It is entirely arguable that branded manufacturers have pushed their prices 5 per cent beyond the real underlying level of inflation, and that has now been delivered back to consumers via promotions." Another characteristic of the sector, according to Kantar Worldpanel, is that Sainsbury's has fairly consistently expanded its market share over the last six years, although at 16.3 per cent it is still dwarfed by Tesco's 30.2 per cent.
Surely, then, Sainsbury's has little chance of ever catching Tesco, which overtook its rival to become the UK's biggest grocer in 1995? While Mr King describes the subject as "historical and academic", he says: "If we outperform them as much for the next 15 years, as they did us through the 1990s, then who knows what might happen?"
He adds: "Whether we are gaining ground on Tesco is not our definition of business success. We don't have any internal targets that are focused on any of our competitors."
Does he admire Tesco? Mr King says: "I think you have to admire what [Sir] Terry [Leahy] achieved there. The business had a strategy and executed it very well over a long period of time. And I hope to that extent, that is something we aspire to."
One way in which Sainsbury's may follow Tesco is by expanding internationally. Sainsbury's has a team looking at China and Mr King admits it is an attractive market, but he cautions that a decision on a potential launch remains a "long way off".
He says: "One should not be in a hurry to go and spend shareholders' money in another part of the world when we have so much opportunity to grow and develop our existing business in the UK. We will take a long hard look at it and if we think the opportunity is one that Sainsbury's can uniquely exploit, then in the fullness of time I am sure we will decide to do something."
A more concrete event on the horizon is Sainsbury's sponsorship of the 2012 Paralympic Games in London, and Mr King waxes lyrical about the enthusiasm it has generated at the supermarket. "There is no single thing we have done over the last five years that has been more of a lightening conductor for excitement," he says. More than 3,000 colleagues at Sainsbury's applied for the 150 volunteer jobs at the Paralympics.
Asked what has given him the most satisfaction at Sainsbury's, he says: "I am most proud that the turnaround at Sainsbury's has very largely been achieved with the same people that were here before."
Although only one of the board members pre-dates Mr King, more than 900 of the grocer's most senior 1,050 employees were still at Sainsbury's when its four-year Making Sainbury's Great Again incentive plan paid out in 2008.
He says: "Achieving greater performance with the same people, as a chief executive, is always the most fulfilling thing you can do."
Store managers are less likely to appreciate Mr King's policy of always turning up unannounced, typically on a Friday. He says: "All my visits are unannounced. I should see it how customers and colleagues see it. If your favourite auntie is coming to stay you fluff up the cushions and put the Hoover over it."
It has not all been plain sailing for Mr King at Sainsbury's and the grocer's operating margin is little more than half of Tesco's, whichis about 6 per cent. This can be partly explained by legacy issues, such as Sainsbury's having a lower proportion of freehold stores. But over the past six years – and to some analyst's surprise during the recession – Sainsbury's has shown itself to be more than capable of battling, and often beating, its big rivals, at least in terms of underlying sales growth.
Perhaps more importantly for Sainbury's, Mr King seems committed to it for the foreseeable future. He says: "I am not even thinking about what I might do next. I enjoy the job and the challenges of the job as much as I ever did."
Life on Mars and at M&S
Justin King joined Mars as a graduate trainee in 1983, which taught him "how people should be led, empowered and rewarded". In 1989, he landed at PepsiCo to work in the Middle East and the following year joined Haagen-Dazs, where he became its UK managing director. He then joined Asda in 1994 around the start of its turnaround and held several roles. In 2000, he became the chief executive of Marks & Spencer's food division before Sainsbury's came calling in 2004.
From sailing to Old Trafford
He is married with two teenage children. Away from work, Mr King likes to jog and watch Manchester United. He has sailed all his life and is a member of the Hayling Island Sailing Club, the southern training base for the UK Olympic team. He reads Private Eye and likes the music of The Clash and New Order. "My music taste reflects my age [49 years old]."Reuse content