Sainsbury family back chief exec

The chief executive of supermarket group Sainsbury’s was today understood to have been given the backing of the Sainsbury family as speculation over his future mounted.

Sir Peter Davies, who was appointed to the group in March 2000, had pledged to turn the company around by March 2004 following the implementation of a three-year strategy.

Under the move the group has ploughed around £2bn (€2.8bn) into the business, spending money on improving the supply chain and refurbishing stores.

But sales have failed to take off and earlier this year Sainsbury’s lost its slot as the UK’s number two supermarket to Asda, owned by Wal-Mart.

Last week it reported a 0.2% drop in like-for-like sales growth for the 16 weeks to October 11, at a time when other supermarkets are reporting strong growth.

The news prompted speculation that Sir Peter may resign if he has still failed to boost sales by March 2004, when the three-year plan comes to an end, or may be forced out by disgruntled shareholders.

However, the Sunday Times reported that despite the problems faced by the supermarket Sir Peter still retains the support of the Sainsbury family, who hold a 38% stake in the business.

It said lawyer Judith Portrait, who is trustee of the family’s shareholding, is understood to have said the family remained committed to the long-term strategy at a meeting on Friday.

A Sainsbury’s spokeswoman declined to comment on the report but added: “We did meet with the family on Friday and it is part of our usual programme of meeting with major shareholders.

“Throughout the three-year transformation programme the family have consistently backed the strategy.”

Sir Peter is currently due to step up as chairman in 2004, and investors are reported to be worried that the company’s problems will make it difficult to attract a suitable candidate to replace him.

Justin Kig, head of food at Marks & Spencer, is rumoured to have been approached, but is reported not to be interested in taking on the role.

Sainsbury’s blamed the recent slip in sales on disruption caused by its transformation programme, which includes modernising stores, opening new distribution depots and setting up new IT facilities.

It is also introducing a new range of non-food products, such as crockery and homeware, in a bid to take on department stores and fight back against rivals such as Tesco and Asda.

The spokeswoman said: “Now is the time when there is most disruption because of the implementation of the programme.”