Sainsbury's chief: We have tried to do too much

Lower sales in the past three months brought an admission from Sainsbury's chief executive Sir Peter Davis yesterday that the recovery programme is currently hindering rather than helping.

Sir Peter, heralded as the saviour of the sliding supermar-ket chain when he returned in 1999 from the Prudential, said that sales had been disrupted because Sainsbury's had "tried to do too much too quickly."

He said: "Analysts are not saying that we have not done enough. They are asking why we have tried to do so much."

Like-for-like sales were down 0.2 per cent in the three months to September, the second quarter of the Sainsbury's financial year. The shares fell 9p to 266.5p on the news.

Sir Peter claimed: "Sales are being disrupted as we build solid foundations for future growth. Our trading in this quarter has been similar to that in quarter one.

"While we are not satisfied with our current sales performance, our first priority is to complete the programme."

As Sainsbury's enters the last six months of its three-year recovery period, the one-time largest supermarket chain in Britain has slipped further behind arch-rival Tesco and has been overtaken by Asda.

If the takeover of Safeway by William Morrison goes ahead, Sainsbury's will end its planned recovery period in fourth place.

Sir Peter said: "When I rejoined Sainsbury's, we had an old and creaky distribution system and I said we needed new systems and new depots. We launched a programme costing several billion pounds. Perhaps I didn't make enough then of what needed to be done."

Three new distribution depots are being phased in and a fourth comes on stream in the next few weeks. That means that 70 per cent of sales volume will be going through the new system by next summer. Sir Peter said: "One depot was delayed by flooding, which is why the openings have been bunch-ed more than we intended."

The recovery scheme has entailed extending 90 stores, with 23 more to be enlarged this year. Non-food lines - a higher-margin area where Sainsbury's has been left behind by rivals - will go into this extra space after "we have done the food properly," he said.

Sir Peter rejected suggestions that distributing non-food lines was holding up food. "There is a separate system and network for non-food so the two don't overlap," he said.

He claimed that Sainsbury's was "very much on plan," and added: "The basic point is that we have had weaknesses and we are addressing them.

"The pressures aren't getting to me, though I don't enjoy the criticism. The general view of our long-service people is we are doing the right things."