 Sainsbury's remains under pressure |
Sainsbury's has issued its third profit warning of the year, confirming fears that it is continuing to struggle. For the six months to 9 October, it is forecasting pre-tax profits of between �125m-�135m ($223m-$241m) compared with �366m in the same period last year.
The statement follows a broker downgrade last week which prompted an inquiry by the UK's financial watchdog.
Sainsbury's chief executive Justin King is set to unveil his plans to turn round the business on 19 October.
The profit warning pushed Sainsbury's shares down by more than 3% at the start of trade on Monday, but they later recovered and were down 1.5 pence at 250.5p in late afternoon trade.
Under investigation
Sainsbury's release of a revised profit forecast follows claims the firm gave a briefing to a Merrill Lynch analyst last week.
On Friday, Merrill Lynch issued a note saying it had cut its forecast of a �177m profit by 10% following a conversation with a Sainsbury representative.
The UK's Financial Services Authority is looking into the matter, following worries over potential selective disclosure of information.
A spokeswoman for the supermarket confirmed it had been contacted by the FSA, but said the firm had made the decision to issue today's statement independently.
Sainsbury's, which warned in July that its full year profits would be "significantly below" analysts' expectations, said it was not currently in a position to give any further guidance on expectations for the 12 months.
It will now publish its second quarter and half-year trading statements on 19 October.
On the same day, Sainsbury's chief executive Justin King will announce his plans to put the retailer back on track.
According to weekend press reports, his plan involves the company slashing its dividend payment to shareholders and using the saved cash to cut prices and improve food quality.
'Massively uncompetitive'
Ten years ago Sainsbury's was the UK's number one supermarket, both in terms of profitability and market share.
Since then it has been overtaken by both Tesco and Asda.
Richard Ratner, retail analyst at Seymour Pierce, said he now expects Sainsbury's to report full-year profits of between �240m-�250m, compared with last year's �675m.
"They (Sainsbury's) are massively uncompetitive," said Mr Ratner.
"They've got their non-food offering all wrong."
The firm is now being seen as a potential takeover target. Reports have named private equity firm Permira as a possible suitor.
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They (Sainsbury's) are massively uncompetitive, they've got their non-food offering all wrong 
