| J Sainsbury Plc |
Article Index for J |
Information AboutJ Sainsbury Plc |
J Sainsbury plc is the parent company of '''Sainsbury's Supermarkets Ltd,''' commonly known as '''Sainsbury's''', a chain of Supermarket s in the United Kingdom . The group also has interests in property and banking. The group has an Estate worth about £8.6 billion (March 2007). http://www.j-sainsbury.co.uk/index.asp?pageid=187 For much of the twentieth century Sainsbury's was the market leader in the UK supermarket sector. However in 1995 it lost its place as the UK's largest grocer to Tesco and in 2003 was pushed into third by ASDA . The company's fortunes have improved since the launch of a recovery programme by CEO Justin King in 2004. Despite predictions that Sainsbury's would regain second position and a narrowing of ASDA's lead in recent months, the latest figures released by Taylor Nelson Sofres show Asda's share as 16.6% compared to Sainsbury's at 16.22%. 1 HISTORY Sainsbury's was established as a partnership in 1869 when John James Sainsbury and his wife Mary Ann opened a store at 173 Drury Lane in Holborn , London . In 1922 J Sainsbury was incorporated as a private company. The first self-service branch opened in Croydon in 1950. In 1973 the company was floated as J Sainsbury plc in what was at the time the largest ever flotation on the London Stock Exchange; the company rewarded the smaller bids for shares in order to create as many shareholders as possible. Today the family retain at least 14% of the shares. In 1975, Sainsbury's launched the "Sainsbury's SavaCentre" hypermarket format as a joint venture with BHS . This was the first attempt to launch supermarkets with a large non-food range in the UK. Savacentre became a wholly owned Sainsbury's subsidiary in 1989. As the hypermarket format became more mainstream, with rivals such as ASDA and Tesco launching ever-larger stores, it was decided that a separate brand was no longer needed and the stores were converted to the regular Sainsbury's superstore format in 1999. This is in direct contrast to rival firms Tesco and ASDA, which have been rapidly expanding their ''Tesco Extra'' and ''ASDA Wal-Mart Supercentre'' hypermarket formats in recent years. Sainsbury's founded the Homebase DIY chain in 1979. Homebase was tripled in size in 1995 with the acquisition of the rival Texas Homecare from the Ladbroke Group plc. Sainsbury's sold the Homebase chain in December 2000 in a twofold deal worth £969 million. Sales of the chain of stores to venture capitalist Schroder Ventures generated £750 million and sale of 28 development sites, which had been earmarked for future Homebase stores, were sold for £219 million to rival B&Q's parent company, Kingfisher Plc . At the time, the chain had 13% of the UK market, behind B&Q and Focus Do It All . The last counter service branch closed in 1982. In November 1983 Sainsbury's purchased 21% of Shaw's Supermarkets , the second largest grocery group in the north-east United States. In June of 1987, Sainsbury's acquired a controlling interest. Despite good performance by Shaw's, Sainsbury's sold the group on 30 April 2004. In 1992 the long-time CEO John Sainsbury retired and was replaced by his cousin, David Sainsbury . In 2004 ''The Times'' quoted a former executive and others who view this event as the start of the company's downturn due to management failures of David Sainsbury and his successors, Dino Adriano and Peter Davis . Mistakes cited include David Sainsbury's famous dismissal of Tesco's loyalty card, the reluctance to move into non-food retailing, the indecision between Sainsbury's quality/price position, "the sometimes brutal treatment of suppliers" which led to suppliers favouring Tesco over Sainsbury's and the unsuccessful John Cleese advertising campaign.2 Sainsbury's expanded its operation North of the border, with its first Scottish store (Darnley) opening in January 1992. In June 1995 Sainsbury's announced its intention to move into the Northern Ireland market, until that point dominated by local companies.3 Between December 1996 and December 1998 the company opened seven stores. Two others at Sprucefield , Lisburn and Holywood Exchange , Belfast would not open until 2003 due to protracted legal challenges. Sainsbury's move into Northern Ireland was undertaken in a very different way from that of Tesco. While Sainsbury's outlets were all new developments, Tesco (apart from one Tesco Metro) chose instead to purchase existing chains from Associated British Foods (see Tesco Ireland ). In March 1997 Sainsbury's Supermarkets Ltd. was established as a separate subsidiary of the group. In June 1999 Sainsbury's unveiled its new Corporate Identity , which compromised the current logo created by 20/20 Design (right), new corporate colours of "living orange" and blue, Interstate as the company's general use font, the M&C Saatchi strapline "Making life taste better" and new staff uniforms.45 The strapline was dropped in May 2005 and replaced in September of that year by "Try something new today." While the Interstate font was used almost exclusively for many years, the company introduced another informal font in 2005 which is used in a wide range of advertising and literature. In 1999 Sainsbury's acquired an 80.1% share of Egyptian Distribution Group SAE, a retailer in Egypt with 100 stores and 2,000 employees. However poor profitability led to the sale of this share in 2001.6 On 8 October 1999 the CEO Dino Adriano lost control of the core UK supermarket business, instead assuming responsibility for the rest of the group. David Bremner became head of the UK supermarkets. This was "derided" by the city7 and described as a "fudge".8 On 14 January 2000 Sainsbury's reversed this decision by announcing the replacement of Adriano by Sir Peter Davis effective from March. 2000-2004: Peter Davis Davis' appointment was well received by investors and analysts.9 In his first two years he raised profits above targets, however by 2004 the group had suffered a decline in performance relative to its competitors and was demoted to third in the UK grocery market. Davis also oversaw an almost £3 billion upgrade of stores, distribution and IT equipment, but his successor would later reveal that much of this investment was wasted and he failed in his key goal - improving availability. Part of this investment saw the construction of four fully automated depots, which at £100 million each cost four times more than standard depots.10 In 2001 Sainsbury's moved into its current headquarters at Holborn, London. Sainsbury's previously occupied Stamford House and 12 other buildings around Southwark . The building was designed by architectural firm Foster And Partners and had been developed on the former Mirror Group site for Andersen Consulting (now Accenture ), however Sainsbury's acquired the 25 year lease when Accenture pulled out. Sainsbury's is a founding member of the Nectar Loyalty Card scheme, which was launched in autumn 2002 in conjunction with Debenhams , Barclaycard and BP . The Nectar scheme replaced the Sainsbury's Reward Card; accrued points were transferred over. In 2003 Wm Morrison Supermarkets made an offer for the Safeway group, prompting a bidding war between the major supermarkets. The Trade And Industry Secretary , Patricia Hewitt , referred the various bids to the Competition Commission which reported its findings on 26 September . The Commission found that all bids, with the exception of Morrisons, would "operate against the public interest". As part of the approval Morrisons was to dispose of 53 of the combined group's stores. In May 2004 Sainsbury's announced that it would acquire 14 of these stores, 13 Safeway stores and 1 Morrison outlet located primarily in the Midlands and the north of England. The first of these new stores opened in August 2004. At the end of March 2004 Davis was promoted to Chairman and was replaced as CEO by Justin King . In June 2004 Davis was forced to quit in the face of an impending shareholder revolt over his salary and bonuses. Investors were angered by a bonus share award of over £2m despite poor company performance. On 19 July 2004 Davis' replacement, Philip Hampton, was appointed as chairman. Hampton has previously worked for British Steel , British Gas , BT and Lloyds TSB . 2004 onwards: Justin King ]] Justin King joined Sainsbury's from Marks And Spencer Plc where he was a director with responsibility for its food division and Kings Super Markets, Inc. subsidiary in the United States.11 King was also previously a managing director at Asda with responsibility for hypermarkets. King ordered a direct mail campaign to 1 million Sainsbury's customers as part of his 6 month business review asking them what they wanted from the company and where the company could improve. This reaffirmed the commentary of retail analysts - the group was not ensuring that shelves are fully stocked, this due to the failure of the IT systems introduced by to increase funds available for price cuts and quality. King hired Lawrence Christensen as supply chain director in 2004. Previously at Safeway he is an expert in logistics. Immediate supply chain improvements included the reactivation of two distribution centres. In 2006 Christensen commented on the four automated depots introduced by Davis, saying "not a single day went by without one, if not all of them, breaking down... The systems were flawed. They have to stop for four hours every day for maintenance. But because they were constantly breaking down you would be playing catch up. It was a vicious circle." Christensen said a fundamental mistake was to build four such depots at once, rather than building one which could be thoroughly tested before progressing with the others.12 In 2007 Sainsbury's announced a further £12 million investment in its depots to keep pace with sales growth and the removal of the failed automated systems from its depots.13 Sainsbury's sold its American subsidiary, Shaw's , to Albertsons in 2004.14 Also in 2004 Sainsbury's expanded its share of the Convenience Store market through acquisitions. Bell's Stores , a 54 store chain based in north east England was acquired in February 2004.15 Jackson's Stores , a chain of 114 stores based in Yorkshire and the North Midlands, was purchased in August 2004.16 JB Beaumont , a chain of 6 stores in the East midlands was acquired in November 2004.17 SL Shaw Ltd, which owned six stores was acquired on 28 April 2005 for £6 million.18 On 29 September 2004, Sainsbury's established Sainsbury's Convenience Stores Ltd. to manage its Sainsbury's Local stores and the ''Bells'' and ''Jacksons'' chains. The latter two are to be rebranded as Sainsbury's Local by 2009. Since the launch of King's recovery programme the company has reported nine consecutive quarters of sales growth, most recently in March 2007. Early sales increases were credited to solving problems with the company's distribution system.19 More recent sales improvements have been put down to price cuts and the company's focus on fresh and healthy food.20 According to the latest Taylor Nelson Sofres rankings published in March 2007, Sainsbury's market share was 16.37% compared to Tesco's 31.35%, ASDA's 16.83% and Morrison's 11.08%. Takeover bid: one On 2 February 2007 , after months of speculation about a private equity bid, CVC Capital Partners , Kohlberg Kravis Roberts (KKR) and Blackstone Group announced that they were considering a bid for Sainsbury's.21 The consortium grew to include Goldman Sachs and Texas Pacific Group . On 6 March 2007, with a formal bid yet to be tabled, the Takeover Panel issued a bid deadline of 13 April .22 On 4 April KKR left the consortium to focus on its bid for Alliance Boots .23 On 5 April the consortium submitted an "indicative offer" of 562p a share to the company's board. After discussions between Sir Philip Hampton and the two largest Sainsbury family shareholders ( Lord Sainsbury and Lord (John) Sainsbury ) the offer was rejected. On 9 April the indicative offer was raised to 582p a share, however this too was rejected. This meant the consortium could not satisfy its own preconditions for a bid, most importanly 75% shareholder support; the combined Sainsbury family holding at the time was 18%. On 11 April the CVC-led consortium abandoned its offer, stating "it became clear the consortium would be unable to make a proposal that would result in a successful offer."24 On 2007 Post takeover bid On 16 May 2007 Sainsbury's announced underlying profits for the year ending on . ''The Times''. Accessed on 2007-05-22 . 66% of these sales are to come from grocery and 33% from nonfood (e.g clothing and entertainment). Other plans include the refurbishment or extension of half of the company's stores. Takeover bid: two On 18 July 2007 , it was reported that Delta Two had tabled a takeover bid. FINANCIAL PERFORMANCE #denotes 52 weeks #denotes 56 weeks. #"One off operating costs" of £152 million incurred. This includes £63 million to terminate the IT outsourcing contract with Accenture . #£168 million before exceptional costs (cost of "turnaround" plan and write off of excess merchandise etc.) STORE FORMATS , the company's eighth Northern Irish store.]] |
|
|