Outlook: Sainsbury's

THERE IS always something to be said for self criticism, but as countless generations of zealots have found, it doesn't necessarily lead to self improvement. There were no excuses at Sainsbury's yesterday. Dino Adriano, the chief executive, was brutally frank. "The level of sales growth at Sainsbury's Supermarkets is not acceptable."

Underlying like-for-like sales growth of 1.2 per cent is just not good enough when your arch-rival and market leader Tesco is racking up 4 per cent. Profits will just about meet market forecasts for last year, the company said yesterday, but for this year there will be a fall, despite the decision to shed 300 people and invest pounds 30m to drive top-line growth.

It was no wonder that, excited by the Kingfisher Asda announcement, the stock market perversely took all this as good news, figuring that Sainsbury's weakness would make it a likely target for a new wave of supermarket consolidation. Actually, the market is probably wrong about this. With the Government and competition authorities in their present mood, no merger of supermarket companies would get the thumbs up, and there are no other Sir Geoffs around intent on building up some new retail conglomerate.

It's possible that Sainsbury could make a target for Wal-Mart, or some other foreign behemoth interested in establishing a UK footing, but the shareholders would be unwise to bank on it. The odds are that Sainsbury will have to manage its own way out of its present malaise. Mr Adriano and his team have got their work cut out.