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Encyclopedia > J Sainsbury plc

J Sainsbury plc is the parent company of Sainsbury's Supermarkets Ltd, commonly known as Sainsbury's, which is a chain of supermarkets in the United Kingdom. The company is listed on the London Stock Exchange. The J Sainsbury group also has interests in property and banking.

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Sainsbury's Supermarkets

Sainsbury's was established in 1869 when John James Sainsbury and his wife Mary Ann opened a store in Drury Lane in Holborn, London. Until 1973 the company was wholly owned by the Sainsbury family, however it was then floated in what was at the time the largest ever flotation on the London Stock Exchange. Today the family retain approximately 30% of the shares. Sainsbury's is a founding member of the Nectar loyalty card scheme, which was launched in autumn 2002 in conjunction with Debenhams, Barclaycard and BP.


In 1987 it took over US chain Shaw's Supermarkets. On 26 March 2004 it was announced that it was selling the chain to Albertsons Inc. for $2.5 billion.


Sainsbury's was for decades the premier supermarket in the UK, it lost this position however in 1995 to Tesco, further slipping to No.3 in 2003 behind Walmart-owned Asda. The supermarket chain has yet to recover from this, with profits and sales growth consistently below that of its main rivals. In 2003 it had a turnover of 18,144 million pounds, and a profit of 695 million pounds. It employed around 150,000 people.


The appointment of Sir Peter Davis as CEO in March 2000 was seen as an attempt to regain market position and if he is judged on that aim then he can be said to have failed. During his term Sainsbury's was demoted to third in the UK grocery market. In his first two years he raised profits above targets, however the decline in performance relative to its competitors would lead the group to make its first ever loss in 2004. Davis also oversaw an almost 3Bn upgrade of stores, distribution and IT equipment, but Davis' successor would later reveal that much of this investment was wasted and he failed in his key goal - improving availability.


In 2003 Wm Morrison Supermarkets made an offer for the Safeway group, prompting a bidding war between the major supermarkets. The Trade and Industry Secretary, Patricia Hewitt, referred the various bids to the Competition Commission which reported its findings on September 26th. The Commission found that all bids, with the exception of Morrisons, would "operate against the public interest". As part of the approval Morrisons was to dispose of 53 of the combined group's stores. In May 2004 Sainsbury's announced that it would acquire 14 of these stores, 13 Safeway stores and 1 Morrison outlet located primarily in the Midlands and the north of England. The first of these new stores opened in August 2004.


Sainsbury's use NCR checkout or Point of Sale equipment, operating Retalix "Storeline" software.


Management changes

At the end of March 2004 Sir Peter was promoted to Chairman and was replaced as CEO by Justin King, who joins Sainsbury's from Marks and Spencer plc. Mr. King was also previously a managing director at Asda.


In June 2004 Davis was forced to quit in the face of an impending shareholder revolt over his salary and bonuses. Investors were angered by a bonus share award of over 2m despite poor company performance. On July 19 2004 Davis' replacement, Philip Hampton, was appointed. Hampton has previously worked for British Steel, British Gas, BT and Lloyds TSB.


King ordered a direct mail campaign to 1 million Sainsbury's customers as part of his 6 month business review asking them what they wanted from the company and where the company could improve. This reaffirmed the commentary of retail analysts - the group is not ensuring that shelves are fully stocked, this due to the failure of the IT systems introduced by Peter Davis.


On October 18 all store managers gathered in Birmingham where King unveiled the results of the business review and his plans to revive the company's fortunes. This was made public on October 19th and was generally well received by both the stock market and in the media. Immediate plans include laying off 750 headquarter staff and the recruitment of around 3,000 shopfloor staff to improve the quality of service and the firm's main problem: stock availability. At the same meeting Lawrence Christensen, the newly appointed supply chain director and an expert in logistics, highlighted the reasons for availability issues and his plan to address them. Immediate supply chain improvements include the reactivation of two distribution centres.


Banking

In 1997 Sainsbury's Bank was established - a joint venture between J Sainsbury plc. and the Bank of Scotland.


Services offered include car, life, home, pet and travel insurance as well as health cover, loans, credit cards, savings accounts and ISAs.


Property

J Sainsbury's property interests are large, with a separate company within the group responsible for managing the company's existing property assets and the development of new ones (including new stores and other commercial properties).


Sainsbury Family

Several members of the Sainsbury family have been prominent in British public life:

See Also

External links

  • J Sainsbury supermarket chain website (http://www.sainsburys.co.uk/)
  • J Sainsbury plc corporate website (http://www.j-sainsbury.co.uk/)
  • Sainsbury warns on profit as it checks out of U.S. (http://uk.biz.yahoo.com/040326/80/epk5d.html); Reuters; March 26, 2004.
  • BBC News Online - Sainsbury's makes first ever loss (http://news.bbc.co.uk/1/hi/business/4018407.stm)

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