Emphasis switched from operations to customer offer and availability
Sainsbury's this morning outlined its plans for recovery following what has been described as four wasted years under Sir Peter Davis.
The retailer has struggled to claw back its faltering market position in the face of intense competition from rivals, such as Tesco and Asda. This morning King will present his back to basics strategy to City analysts, including:
- Grow sales by£2.5 billion over three years to end of 2007/08.
- New management team
- Restore unique brand proposition of quality food at fair prices.
- Continue to fix operational basics and change cost structure.
- Investment of at least£400 million to improve customer offer over next three years.
- Ongoing buying efficiencies of 100-150bp per annum reinvested in customer offer.
- Recruitment of 3,000 additional staff into stores.
- Achieve operating efficiencies of at least£400 million.
- Underlying profit before taxation for first half year expected to be within a range of between£125 -£135 million
- Exceptional costs from the Business Review estimated at£550 million.
King said of Davis' work: 'Sainsbury's Business Transformation Programme has not realised many of the anticipated performance improvements and cost benefits and distracted us from investing in and delivering the customer offer. In particular the challenges this has presented have made it more difficult for our store colleagues to deliver an acceptable level of service to customers.'
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