Yet that is the extraordinary situation that Sainsbury’s found itself in this week after the collapse of Delta Two’s bid for the grocer. And, while Paul Taylor, who headed the bid, is now damaged goods and Robert Tchenguiz, a 10 per cent shareholder, is nursing a massive loss, the main question is where now for Sainsbury’s.
The deal’s collapse will probably turn out to be good news for Sainsbury’s in the long run. We’ll never know, but labouring under such a vast debt burden would have been unhelpful at best and crippling at worst to the grocer’s competitive position. Furthermore, Delta Two’s conduct during negotiations didn’t fill people in the business with confidence.
But, in the short term, it is a shattering blow. Chief executive Justin King won’t become rich beyond his wildest dreams, but he’s not out of pocket. Few people in retail make lifestyle-changing sums of money, but a whole legion of store managers and long-serving staff would have profited from the Sainsbury’s deal.
King will now have to lift morale off the floor – no easy task – while the share register is dominated by uneasy bedfellows such as Delta Two, Tchenguiz and the founding family.
King has done an admirable job of maintaining focus on improving the company’s sales during a year of utter turmoil, but the harder part of his mission is still to come, and that’s restoring profitability. He will need all his famed motivational skills to ensure that his team holds together and stays focused on completing Sainsbury’s recovery.
Unhappy new year
Retailers are often accused – with some justification – of crying wolf, but this week’s BRC figures showed that, while the market is still volatile, it is slowing fast.
Christmas trading may be OK, but consumers are definitely edgy. And, while a lot can change quickly, with none of the global economic indicators looking remotely positive, 2008 is set to be anything but a vintage year for retailers.