Sainsbury's founders tight-lipped over future plans

Troubled UK supermarket chain Sainsbury today remained silent on claims that its founding family may sell it or take it off the stock market.

The company declined to comment on a report saying the family would consider disposing of the business or taking it private if new chief executive Justin King has not produced evidence of a recovery by May next year.

The family is “visibly worried and thinking about plan B” for the business, although they currently are prepared to give Mr King the benefit of the doubt, the Sunday Telegraph cited a “senior businessman and confidant of the family” as saying.

Mr King is reviewing the business and is expected to give an update on his progress on October 19.

A Sainsbury’s spokeswoman said the review covered everything and the group was not ruling anything in or out.

But she added of today’s report: “This is a rumour and we don’t comment on rumour or speculation.”

Only a week ago, reports claimed that private equity group Permira was preparing a £5bn (€7.3bn)-plus bid for the ailing supermarket chain. Burton-to-Dorothy Perkins retail billionaire Philip Green has also been mentioned as a potential bidder, although he has denied any interest.

Sainsbury’s has been considered vulnerable to a takeover bid after it lost ground over the past 12 months to rivals Asda and Tesco due to stiff price competition.

Supply problems have also dogged the group, which analysts have criticised for moving too slowly into non-food areas such as electronics, music and clothing where the margins are much higher.

A shake-up of management began in March with Mr King taking on the role of chief executive after a successful stint in the food department of Marks & Spencer.

Controversy then surrounded the departure of chairman Sir Peter Davis in July as shareholders slammed a £2.3m (€3.3m) share award for a year in which profits fell 2.9% to £675m (€980m).

Members of the Sainsbury family hold a total of around 38% of the group’s shares, with institutional investors accounting for the bulk of the rest.

Today’s report quoted another executive source as saying the family had told Mr King it would do nothing to destabilise him for now.