Justin King's 10-year reign at Sainsbury's draws to a close at AGM

http://www.theguardian.com/business/2014/jul/09/justin-king-farewell-sainsburys-agm

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One of the longest goodbyes in UK corporate history will come to a close at Sainsbury's annual meeting on Wednesday when Justin King bows out as chief executive.

King, who announced his resignation in January, will leave the supermarket group after 10 years in the job. He is credited with turning Sainsbury's from a company that could not get the right stock on to the shelves into the strongest performer of the big four grocers.

Under King, Sainsbury's regained its position as Britain's second-biggest supermarket behind Tesco and notched up nine years of sales increases even during the long recession and consumer slump. He spotted the rise of the internet and convenience shopping early, resisted the temptation of international expansion and achieved a balance between price and quality.

Clive Black, head of research at Shore Capital Stockbrokers, said: "I wouldn't say Sainsbury's financial performance was stellar under Justin King but he prevented it from crashing out of existence and there was a danger of that because Sainsbury's was a basket case. If you had said in 2007 that Sainsbury's would outperform Asda, Morrisons and Tesco you would have been in danger of being sectioned and that is his greatest achievement."

Sainsbury's long run of like-for-like sales rises ended in the final quarter of last year as it succumbed to fierce competition between grocers. The rise of Aldi and Lidl had already eaten into the sales of Tesco and Morrisons in a grocery market that is barely growing as shoppers keep a tight rein on spending.

King's last set of results saw sales dip again in the first quarter of this year but he and his successor, commercial director Mike Coupe, stuck to their prediction that sales would rise slightly for the full year.

King said: "I'd have preferred sales to be growing but I'm not leaving on a low. Total sales are growing and we delivered a performance in the context of a market that is growing at the lowest level in 10 years. Our outperformance if anything was a bit stronger in the last quarter than it has been in a while."

King has dismissed talk of a supermarket price war, saying competing price campaigns are a "skirmish" that is no worse than in the 1990s.

But one of Sainsbury's last moves under King was to take a half share in the UK relaunch of Denmark's Netto, which plans to take on Aldi and Lidl across the UK.

Sainsbury's annual meeting, which takes place in London, is unlikely to see the kind of unrest suffered by Tesco and Morrisons. Shareholders are likely to give the relentlessly upbeat King a fond farewell.

However, some investors are nervous about Sainsbury's prospects after King leaves. Coupe has said there will be no change to the "underlying principles" that made the company successful under King: selling good quality food at competitive prices in pleasant stores.

Black at Shore Capital said Coupe needed to win over Sainsbury's staff at the same time as clamping down on costs in a tough market.

"He has come in at a very challenging time and he has got quite a lot on his plate."

However, he gives Coupe most of the credit for the Netto deal, which lets Sainsbury's get into the discount market without "polluting" its own reputation for quality.

"We thought that was a very good idea. In terms of strategic thinking, we applaud it," Black said.