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Articles: Sainsbury chairman standing down

Posted by admin on Thursday, July 01, 2004 - 01:48 AM

Sainsbury's has confirmed that its chairman Sir Peter Davis is to stand down with immediate effect.
He is believed to be leaving due to pressure from some large institutional shareholders, unhappy at his £2.4m bonus for the 2003/04 financial year. Sainsbury's also warned its profits for the current 2004/05 year would be "significantly below" expectations. Shares tumbled 8.7% despite former Lloyds TSB director Philip Hampton being named as the new chairman. Mr Hampton, 50, will have to work hard to help the company regain ground lost to Tesco and Asda. Before today's latest profit warning Sainsbury's reported a 2.9% fall in annual profits back in May. Falling sales Sir Peter's resignation is believed to have followed an emergency board meeting on Wednesday night, following shareholder anger that he had decided to pocket the £2.4m bonus at the same time as sales and profits ebb away. He only became Sainsbury's chairman three months ago, having been group chief executive for four years. Prior to that the 62-year-old was group chief executive of Prudential from 1995. He previously worked for J Sainsbury for 10 years from 1976 as assistant managing director responsible for buying and marketing operations. Sainsbury's thanked Sir Peter for "all his hard work on behalf of the company". It said it had not been possible to reach agreement in talks with Sir Peter over potential changes to his bonus package. "It was mutually decided that this matter would be referred to legal representatives of both parties as part of his termination arrangements," the company said. Losing ground It said the financial skills of Mr Hampton, former finance director at Lloyds TSB, and the proven retailing talent of chief executive Justin King, who started in March, were a powerful combination that could take the group forward. Sainsbury's will pay Mr Hampton, who is a non-executive director of Belgian telecoms group Belgacom and of cement maker RMC, £395,000 a year. Before appointing Mr Hampton as the new chairman Sainsbury's took the precaution of first sounding out the opinion of investors. This it failed to do this back in February when it then announced that former Bass boss Sir Ian Prosser would take over as chairman from July 2005. Such was the shareholder opposition that Sainsbury's had to do a U-turn and abandon Sir Ian's future appointment. Over the past few years Sainsbury's has continually lost ground to its main supermarket rivals. Continuing efforts Previously the number two supermarket in terms of market share behind Tesco, it has since been pushed into third place by Asda. And Morrisons, which recently bought Safeway, is now threatening to reduce Sainsbury's to fourth. And while Tesco, Asda and Morrisons have all reported ever-rising sales and profits, Sainsbury's has continued to see both decline. For the current first quarter Sainsbury's said total sales were up 1.9%, thanks to strong petrol sales. It added that customers were already seeing the benefits of moves to lower prices and improve product availability, but admitted that a rise in profits was still sometime away. "Underlying profit before tax for 2004/05 will be significantly below consensus market forecasts with the majority of the impact expected in the first half," it said. Mr King said he can turn the tide at Sainsbury's, but would not be drawn on how he will kick-start growth until his ongoing review is completed. "I'm very confident there is a place for Sainsbury in this (the supermarket) market," Mr King said.

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