A number of customer-oriented initiatives will have considerable adverse impact on profits for 2004/2005, Sainsbury admitted on Thursday.
As it also announced the resignation of chairman Sir Peter Davis and his replacement with Philip Hampton, Sainsbury warned it expected profits would be “significantly below” analysts’ forecasts of £505m.
It said reducing its prices had reduced margins, and moves to improve availability, including deferral of a planned depot closure and higher than average wastage levels, had increased costs. Trading out of its over-stocked position in non-food had also hit profits.
Sainsbury also announced poor trading figures for the first quarter of this financial year, with like-for-like sales for the 12 weeks to June 19 up 1%.
Chief executive Justin King said he would report on his review of the whole business with the second quarter results on October 19.