The supermarket is set to cut its 6.6% dividend and hold back on plans to open new stores.
Mike Coupe is set to unveil a new strategic review this week which is expected to see the company cutting costs and spending, in hopes to shore up its balance sheet and free up money to remain competitive in the market.
According to reports, the store is expected to cut is dividend from 6.6% to 4.6%.
Michael Coupe CEO of J Sainsbury has stressed the importance the supermarket will now focus on online shopping, convenience stores and its Tu clothing brand. He said: ‘The market remains dynamic and fiercely competitive. The long-running trend of more frequent, convenient shopping has accelerated, resulting in smaller basket sizes. An increase in price investment and short-term competitor promotional activity, combined with favourable commodity markets, has resulted in deflation in many areas of our food business.’
Shares within the company are now down 36% from around 410 pence a year ago, compared to early October which saw shares bounce 16% off their 224 pence.
An analyst at Shore Capital, Clive Black said “Sainsbury’s might cut capital expenditure from just below £900 million this year to between £550 million and £600 million in future. We expect Sainsbury’s to join Asda and Morrisons in becoming more in touch with its customers through a re-allocation of resources from a lower cost base with constrained capital outflows and potentially lower dividend flows. For now, as is the case at Tesco, we suspect customers must take precedent over shareholders and other stakeholders in the food system.”
A drastic drop in like-for-like sales has been reported from Sainsbury’s. CEO Mike Coupe is expected to disclose a first-half fundamental pre-tax profit of £350 million this week, down 12.5% on the same period a year earlier.