Sainsbury's sales and profits slide

NEW chief executive Justin King stamped his authority on Sainsbury's today, with a boardroom shake-up that sees the exit of Stuart Mitchell, head of its struggling UK stores.

The top-level casualty was accompanied by a fall in profits as the group warned once again that tough trading will also hit its performance this year.

Profits for the 12 months to 27 March fell 2.9% to £675m, as like-for-like sales at the core UK stores chain slid 0.2%. Total sales were 2.2% higher, at £15.3bn.

King, the former head of Marks & Spencer's food operations, said he had spent much of his first seven weeks touring stores and depots.

'I am now ready to take control of running the business on a day-to-day-basis,' he said. 'I need to be more directly involved in all aspects of trading.'

In his first formal statement to the City, King gave little detail of his plans but said: 'We made our first moves on pricing earlier this month, and customers are already seeing the benefit in their shopping baskets.

'This is the first step in a much longer journey. It's very early days to be using words like strategy. The most important thing for us is to get the sales line moving.'

All the senior team will now report directly to King and the group has redrawn boardroom responsibilities.

Chairman Sir Peter Davis, who has headed the group for the past four years, will go part-time from July, taking a pay cut from £850,000 to £500,000. King also said that, because of the profits fall, there would be no bonuses for directors, apart from a special payment to finance director Roger Matthews.

The departing Mitchell, a Sainsbury's veteran of 22 years and one-time contender for the top job, is entitled to compensation of more than £600,000 but payments are to be made on a phased basis until he finds another job.

The group is still looking for a chairman after the debacle over the appointment of Sir Ian Prosser, who withdrew from the role after fierce resistance from institutional shareholders.

It has 'reflected hard on the lessons learnt' and has restarted the process, appointing headhunters Egon Zehnder International to lead the search.

Retailers' jobs shuffle

STUART Mitchell is the latest in a lengthening list of retailers to part company with their employers. He joins Luc Vandevelde at Marks & Spencer, who quit as chairman after accusations he was not spending enough time at the group.

Also exiting M&S is Steve Longdon, head of womenswear, making way for Asda clothing guru Kate Bostock.

Some say chief executive Roger Holmes may be next, depending on the board's choice of chairman.

New chief executives have also been installed recently at Boots - Asda man Richard Baker - and at WH Smith, where Kate Swann joined from Argos. Her replacement will be Sainsbury's Sara Weller.