In March 2015, Sainsbury’s warned that trading outlook for the rest of the financial year would remain challenging for the foreseeable future after reporting a drop in like-for-like sales for a fifth consecutive quarter.
Sainsbury’s has already spent half the £150m it set aside in November 2014 to fund 12 months worth of price cuts, said boss Mike Coupe.
This was the reasoning behind a cut of 500 jobs at its head office. BBC business correspondent Emma Simpson suggested that a supermarket price war from smaller discounters prompted the cuts.
Coupe also claimed prices were slashed from over 1,100 products in an attempt to win and retain customers , and that food deflation would persist Sainsbury’s food prices are falling 2.5 per cent ahead of the wider market.
“All the big established supermarkets are trying to cut costs and simplify their business as they grapple with falling sales, the rise of online and changing shopping habits,” Simpson said.
Sainsburys will continue to invest in the “faster growing parts of its business”, said Coupe. This includes opening more stores and enabling shoppers to pick up groceries ordered online.
As part of a three year restructuring plan, however, Sainsbury’s is set to cut a further 800 jobs, which would mean the loss of departments and deputy manager positions.
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According to Roger Burnley, retail and operations director, it is an exceptionally difficult decision to make”, but it will save Sainsbury’s 500m.
This has led to the appointment of former Next finance director David Keens as a non-executive director, a position he will take on 29 April.
Keens will succeed Gary Hughes, who will be stepping down as chairman at the company’s annual meeting in July. Keens will then take over his responsibilities as chairman of the audit committee.
Sainsbury’s chairman David Tyler, a former FD at GUS, said Keens’ skills and background were “particularly relevant” for the business.
He claimed that Keens’ “deep retail experience” and his knowledge of “fast-moving consumer business” were “particularly relevant” at a time when the business is growing its own successful non-food ranges.