John Moylan reports: "Sainsbury's has somehow lost its way"

The job losses are in addition to 230 announced earlier this week with the impending closure of the head office of its Savacentre division.

The company says sales at its supermarkets rose by only 2.2% in the last year, though they have improved slightly in more recent months.

The company also warned that it is going to reorganise the management of its stores soon to help boost profits.

Sainsbury's is banking on its drastic reforms

The jobs cuts at Sainsbury were announced as the group reported disappointing trading figures.

The stock market reacted favourably to the company's cost-cutting drive.

However, the competitive pressure on Sainsbury is bound to increase with news that rival Asda might merge with retail giant Kingfisher.

A sector analyst said: "This deal could fundamentally shake up the UK food retailing sector, placing pressure on stores like Marks & Spencer and Sainsbury."

Slow sales

Like-for-like sales at Sainsbury's supermarkets increased 2.2% over the year to 6 March.

Retail analyst Robert Clark: Sainsbury's has become dowdy and bland

Its Savacentre business saw like-for-like sales increase just 1.3% in the same period.

The like-for-like sales figures, which are calculated to strip out the effect of new stores being opened, are smaller than the 4% increase reported by Tesco earlier this week.

Analyst Teresa Wickham: Sainsbury's now in much more competitive environment

Sainsbury group chief executive Dino Adriano said: "The level of sales growth at Sainsbury's Supermarkets is not acceptable."

He said he was delighted by the performance at Homebase DIY stores and its US chain Shaw's.

The entire Sainsbury group saw its sales growth boosted by a stronger performance at its Homebase stores and Shaw's, which both saw their like-for-like sales increase by more than 4%.

Sainsbury's head office faces the brunt of job cuts

"In order to maximise the group's profit potential, clear and decisive action is being taken to increase the rate of sales growth at Sainsbury's Supermarkets," said Mr Adriano.

The jobs cuts at its London head office combined with a management restructuring and improvement to buying will incur a one-off cost of £30m in its 1999-2000 financial year.

But the group said the measures will cut costs in the long run by £60m a year.