New Sainsbury blow over 'sell-off'

SAINSBURY is desperately trying to squash rumours that its founding family wants to sell part of its stake in the beleaguered supermarket group.

According to sources, lawyer Judith Portrait, who controls the near-35% stake held by family members in blind trusts, has warned the board in a letter that 'at some point' she might dispose of a proportion of the Sainsbury family stake.

While strongly endorsing chief executive Sir Peter Davis's strategy for the supermarket giant, she is said to have added that it might make sense for Lord (David) Sainsbury of Turville, the Science Minister who owns a 13% stake, not to have all his wealth in one asset.

However, Davis has been telling investors that Portrait has simply written to express her full support for the board and management.

The company on Monday said the letter did not say that the trust was considering selling some of its holding.

Financial Mail reported last week on how the Sainsbury family was split over the future of the group, with some members keen to sell their shares. Two of the biggest shareholders, cousins David and Lord (John) Sainsbury of Preston Candover, were said to be particularly at loggerheads.

The prospect that a member of the founding family might sell shares could exert further pressure on its stock market value. The news comes at the end of another bad week for Sainsbury, which recently lost its place as Britain's second-biggest grocer behind Tesco to American-owned Asda.

Investors who have been visited by Davis on a charm offensive after the annual meeting last month have also expressed surprise at a new strategy mooted by the chain to sell about 70 of the 535 Sainsbury stores.

Sainsbury has indicated that it is considering selling 30 of its big stores and 40 poorly performing town centre sites. The move is unusual as the group is about to start selling items such as clothing and homeware, which would need more space in larger stores.

Analysts have been asking Sainsbury management for some months whether the grocer was considering making changes to its portfolio, particularly 90 under-performing large stores. Until now, Sainsbury said it would not consider disposals.

The suggested sell-off, which would inevitably be referred to the Office of Fair Trading, comes at the same time as Sainsbury's proposed acquisition of 171 Somerfield stores was referred to the Competition Commission by Trade Secretary Patricia Hewitt.

Sainsbury said of the new proposal that it was early days and was part of its plan to replace poorly performing stores with sites in better locations. However, a spokeswoman added that nothing was for sale at this moment.