Sainsbury Market Business
RELEVANTE INFORMATION.
The information analyzed from the financial report is not enough when we want to invest, it is also important to obtain information from external sources, which can help us to take a decision
Therefore is interesting to analyse internal and external information.
To begin with, we will see a small percentage of Sainsbury's history and then how the company has had some losses since 2004 and what the company expects for the future.
Sainsbury's was created in 1869 , Its first store was opened in London, but just since 1973 started to be listed as a company by that time it was the UK'S ever largest flotation on the London stock exchange. The firm has entered into the financial and property business. Nowadays they operate 491 supermarkets and about 303 convenience stores
Even though, since 2004 its level of performance has lowered and comparing with its competitors like Tesco and Asda is now ranked third place, also it has suffered what is believed its first loss. We believe the reason to be mistakes as the indecision between Sainsbury's quality/price position, even the treatment of suppliers which led to suppliers favouring Tesco over Sainsbury's (The Times, Times Newspapers, 2004-10-20, p.48.)
An important issue that the company should pay attention to its distribution system, because it has caused that the shelves in the stores are not properly full and the costumers cannot often find what they are looking for.
The executive Justin King has been planning a reorganization of the business and they have invest on it almost £400 millions, this plan includes a campaign to 1 million Sainsbury's costumers, where they were asked what they wanted from the company and how the company could improve, at the end of this campaign the results showed the weakness of the IT system which was implemented by Peter Davis three years ago.
The plan includes also making redundant 750 headquarters staff on the other hand the idea is employment of new approximately 3,000 store-floor staff to develop costumer service quality..
In 2007 Sainsbury's has invested £ 12 million in its depots to keep pace with sales growth and removal of the failed automated systems, King has order to close a number of underperforming stores and improved the way as the supply chain had been working, hence the performance of the share price has been rising while Mr king has been in charge. Since the recovery programme, the company has reported nine consecutive quarters of sales growth, most recently in March 2007. (The Times, 2007, Sainsbury's to revamp depots as sales grow faster than forecast. Times Newspapers, January 12, 2007).
An important point to talk about is that there have been some considerations about bid for the supermarket, the speculation pushed Sainsbury's shares even as high as 526.5 pence, valuing the firm at about £9bn.
BBC business editor Robert Peston says “Sainsbury's is attractive as a bid target because of the value of its stores as physical assets, rather than as trading shops”. (BBC News., 2004. Bid talk lifts Sainsbury's shares). Available from: http://news.bbc.co.uk/1/hi/business/6323371.stm.
On 25 April Delta Two, the Qatari investment company bought a 14% stake in Sainsbury's causing its share price to raise 7.17%.They increased their stake to 25% in June 2007. (Bowers and Allen. 2007. Sainsbury's plummets after another takeover falls through). The guardian. Available from: http://www.guardian.co.uk/supermarkets/story [Accessed 17 Nov 2007].
Delta Two has tried to buy Sainsbury ‘s but the Qatari firm has failed twice during this year, the first time was in April after opposition from Sainsbury's family, the Delta's decision not to buy affected the shares price and it slumped.
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