Sainsbury's sales remain down despite revamped stores

Permira is alleged to have turned its sights on to the supermarket chain after failing in its bid to buy stationers WH Smith earlier this year.

The Sunday Times says Permira is in talks with financial backers and would seek a management team to lead the bid.

A Sainsbury's spokesman declined to comment on the report.

Sainsbury's has been considered vulnerable to a takeover bid after it lost ground over the past 12 months to rivals Asda and Tesco due to stiff price competition.

Business review

Last week figures from the TNS Superpanel showed sales at Tesco were up 9% from a year ago, in the 12 weeks to 12 September, while Sainsbury's saw no growth at all.

Sainsbury's new chief Justin King is set to unveil the results of a review of the business on 19 October, which investors will watch closely for information on how he plans to revive the group.

The review comes in the wake of two profit warnings from the group so far this year.

Despite a three-year programme of store modernisation, sales at the supermarket chain have remained disappointing.

Supply problems have also dogged the group, which has been criticised by analysts for moving too slowly into non-food areas such as electronics, music and clothing where the margins are much higher.