Sainsbury’s new Chief Executive Officer Mike Coupe said the grocer will stick to its focus on fresh produce and upscale food in a fight with discounters, which have been gaining market share in the UK.
“It’s a story of continuity,” Coupe, who succeeded Justin King as CEO today, said after the company’s annual shareholder meeting. “The reason people shop with us is they get a better quality product underpinned by values of the business. We have also improved our price competitiveness.”
The UK grocery market is polarising, with discounters Aldi and Lidl and upscale Waitrose recording the fastest growth. Under Coupe, Sainsbury will target both ends of the spectrum: focusing on fresh produce and premium own-brand food and also entering the budget store market by bringing Netto back to Britain.
“The Netto deal just gives us more options,” Coupe said. “It’s a growing part of the market that we believe will continue to develop.”
The grocer said on 20 June it had joined forces with Netto’s Danish parent company Dansk Supermarked to open 15 stores by the end of 2015.
Coupe’s predecessor, King, had a nine-year record of unbroken sales growth that ended two quarters ago after discounters prompted the likes of Tesco Plc, Asda and Morrison Supermarkets to cut prices.
Sainsbury shares have dropped 18 per cent in the past 12 months, while Tesco declined 19 per cent.
Growing Again?
King said 11 June he expects same-store sales to return to growth this year. Sainsbury’s market share was 16.7 per cent in the 12 weeks to 22 June, with sales increasing 3 per cent, outperforming the market which expanded 2.8 per cent in that period, researcher Kantar Worldpanel said 1 July.
At today’s meeting, King received a standing ovation and Sainsbury President John Davan Sainsbury praised him for turning the business around.
He declined to comment on his future plans, except to say that a non-compete clause prevents him from working for a Sainsbury competitor for a year and he will honor that, when a shareholder asked him if he could help improve business at Marks & Spencer.
For now, King is off to Brazil for the soccer World Cup final where he hopes Germany will play Argentina on 13 July. Argentina meets Netherlands in the tournament’s second semi-final today after Germany yesterday eliminated host nation Brazil.
Bloomberg News edited by ESM
