Sainsbury's managing director Stuart Mitchell is said to have been locked in showdown talks with new chief executive Justin King, and is thought to be on the verge of walking out.
King joined Sainsbury's as chief executive two weeks ago and intends to restructure management. There has been speculation that Mitchell would be demoted, but it appears now that he may quit.
King, Mitchell and Sainsbury's human resources representatives are understood to have held lengthy talks over the past fortnight, according to a source close to the grocer.
Mitchell has spent his entire career at Sainsbury's and is likely to get a significant pay-off if he walks: in 2003 his remuneration was£556,000.
He joined in 1984 as a graduate trainee and rose to assistant managing director in 2001, before beating Sara Weller to the managing director's role in January last year.
He was put in charge of Sainsbury's business transformation programme, to be completed by this summer, but it has come at the expense of sales.
Sainsbury's refused to comment on Mitchell's future, but said it was happy with the progress of its business transformation programme.
One analyst said: 'The current management can't be held responsible for years of under-investment in the business, but it can for poor availability and the lack of getting stock in store.'