Bottom Line: As the going gets tough, Justin King gets going

 
Julian Harris
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There was a lot of back-slapping at Sainsbury’s yesterday, with Justin King talking up his successor, and his successor lavishing praise on the soon-to-depart chief executive.

“When Justin started at the business we were serving 14m customers a week, and now we’re serving 24m a week. That’s a great achievement,” enthused Mike Coupe.

King insists the firm is in “great shape” and will only get stronger under the leadership of Coupe.

The positive spin extended to the firm’s latest quarterly results, despite six months of declining like-for-likes that have reversed nine years of growth. Never mind that, said King. “The key thing to point to”, rather, is that Sainsbury’s is outperforming rivals – such as Tesco and Morrisons.

Fair enough, yet even Asda managed to post a 0.1 per cent rise in quarterly like-for-likes of late. And most importantly of all, King’s apparent refusal to consider the impact of discounters as anything more than the usual “cut and thrust” of the industry looks increasingly naive.

Sainsbury’s expansion of its convenience stores and online service may be impressive, yet HSBC research brutally notes: “Aldi’s market share alone is growing faster than Sainsbury, Tesco, Morrisons, Asda, Waitrose and Ocado combined are winning share on the internet.”

Ouch. King’s reign may look good overall, but if Coupe is to succeed then he won’t be able to ignore the elephant in the room. It’s sitting in the corner wearing a Lidl T-shirt.

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