Sainsbury has said that second-half underlying profit would not be significantly different from the £125m to £135m range it forecast for the first six months, however, estimated exceptional costs for the company amount to £550m.
These costs include a £120m supply chain write off of automated equipment and a £140m Information Technology write off, but the total figure is off-set by the £275m sale of its US-based Shaw’s supermarket chain in April this year.
The news comes as chief executive Justin King revealed his three-year recovery plan in which he aims to grow sales by £2.5bn by 2008.
He said: “Sainsbury has enormous brand equity. Great quality food and fair prices is what customers want and expect from us. However, we have not delivered this offer effectively.”
The key aspects of the recovery plan include a £400m investment in its customer offer to enhance quality, service and price. The company also recognises that it is the operational basics that need to be fixed first.
King also said the company will be more competitive on price as it looks to make cost cuts of at least £400m.
The company also announced a total sales growth of 4.4% for its second quarter and a like-for-like sales growth of 1.8%, which, excluding petrol, is a drop of 1.1% for the 16 weeks to 9 October.
Of its non-food brands, Sainsbury said sales for its Home offer, which was launched in September last year, were initially encouraging but the range was too extensive. It stated that aggressive trading out of the over-stocked position has put the company in good shape to drive new ranges forward.
Of its ‘Tu’ clothing brand, launched in September this year, it said initial sales have been encouraging and ahead of its expectations.
The company will also be simplifying its store formats to comprise of just supermarkets and convenience stores. Sainsbury’s Central and Savacentre stores will become part of the supermarket estate. It also plans to open two extra depots.
Sainsbury also announced yesterday that it will be creating 3000 new jobs on the front line and it will be cutting 750 middle management jobs by March 2005.
These costs include a £120m supply chain write off of automated equipment and a £140m Information Technology write off, but the total figure is off-set by the £275m sale of its US-based Shaw’s supermarket chain in April this year.
The news comes as chief executive Justin King revealed his three-year recovery plan in which he aims to grow sales by £2.5bn by 2008.
He said: “Sainsbury has enormous brand equity. Great quality food and fair prices is what customers want and expect from us. However, we have not delivered this offer effectively.”
The key aspects of the recovery plan include a £400m investment in its customer offer to enhance quality, service and price. The company also recognises that it is the operational basics that need to be fixed first.
King also said the company will be more competitive on price as it looks to make cost cuts of at least £400m.
The company also announced a total sales growth of 4.4% for its second quarter and a like-for-like sales growth of 1.8%, which, excluding petrol, is a drop of 1.1% for the 16 weeks to 9 October.
Of its non-food brands, Sainsbury said sales for its Home offer, which was launched in September last year, were initially encouraging but the range was too extensive. It stated that aggressive trading out of the over-stocked position has put the company in good shape to drive new ranges forward.
Of its ‘Tu’ clothing brand, launched in September this year, it said initial sales have been encouraging and ahead of its expectations.
The company will also be simplifying its store formats to comprise of just supermarkets and convenience stores. Sainsbury’s Central and Savacentre stores will become part of the supermarket estate. It also plans to open two extra depots.
Sainsbury also announced yesterday that it will be creating 3000 new jobs on the front line and it will be cutting 750 middle management jobs by March 2005.
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