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Last Updated: Wednesday, 19 November, 2003, 12:55 GMT
Sainsbury poaches M&S food boss
Sainsbury's
Competition hots up as Sainsbury struggles to kick-start sales
Supermarket group Sainsbury's has unveiled the boss of Marks & Spencer's food arm as its new chief executive.

Justin King will start work in March when current Sainsbury's boss Sir Peter Davis moves up to become chairman.

Mr King will be under pressure to lift sales, which have remained sluggish despite a 3bn investment programme.

Some have criticised Sir Peter's elevation in light of the firm's poor performance and City guidelines on best practice for the boardroom.

The new code of corporate governance is designed to prevent Enron-style corporate scandals and to bolster investor confidence.

One of its principal items is that a chief executive should not go on to become chairman of the same firm.

Down to number three

Sir Peter said Mr King was the right man to take over from him.

"Justin's early training with Mars and his food retailing experience with value-oriented Asda and quality-focused Marks & Spencer makes him the ideal candidate for Sainsbury's," he said.

But, Nigel Kennett food retail analyst at Gartmore Investment Management, was not convinced that the switch at Sainsbury's would pay off.

"King has obviously got good retailing experience but whether he has the credentials for a more radical task is open to question," he said.

However, brokers JP Morgan backed the move saying investors would be relieved that a successor for Sir Peter had been found.

They added that Mr King's previous seven-year stint at Asda also had several plus points - including non-food expertise he gained there.

The Wal-Mart owned group's aggressive pricing image could also rub off on Sainsbury's, JP Morgan said.

Hard times

Mr King's departure is likely to come as a blow to M&S after recent figures cast doubt on the strength of its recovery.

His first challenge at Sainsbury's will be to revive sales, which grew just 1% to 9.84bn in the six months to October in the face of tough competition.

Underlying profits were 7% higher at 366m but analysts noted this was largely because of cost-cutting measures.

Sainsbury's, once the UK's biggest grocer, slipped to third position earlier this year after being ousted by Wal-Mart-owned Asda.

Sir Peter said the company was "not satisfied" yet with the results of his huge investment programme but believed Sainsbury's was now better placed for long-term growth.

Sainsbury's will pay Mr King, 42, a salary of 675,000. He will also receive compensation of 685,000 in shares for loss of earnings at M&S.

Sainsbury shares closed 4.5% higher at 298.25p.


SEE ALSO:
US buyout firm 'stalking Sainsbury'
02 Nov 03  |  Business
Sainsbury family 'backs store boss'
12 Oct 03  |  Business
Sainsbury's sales slide again
10 Oct 03  |  Business
Revamp for boardroom rules
31 Oct 03  |  Business


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