The shares of Sainsbury’s (LSE: SBRY) (NYSE: JSAIY.US) dropped more than 2% to 348p in early trade this morning after the supermarket’s chief executive announced plans to step down.
Sainsbury’s revealed in a statement that Justin King will leave in July, after serving the company for 10 years. He will be succeeded by Mike Coupe, the group’s commercial director, and Mr King’s right-hand man.
Over the last 10 years Mr King delivered 35 consecutive quarters of like-for-like sales growth, even throughout turmoil in the economy, while Sainsbury’s was the only major supermarket to keep its market share over Christmas. Its market share currently stands at 17.1%, the grocer’s highest in a decade.
The company was in dire straits when Mr King first joined from Marks & Spencer in 2004. Shelves were empty and the company lacked a clear focus.
Sainsbury’s chairman, David Tyler, had the following to say:
“Justin is a truly exceptional leader, who has reshaped Sainsbury’s during his 10 years as CEO, as well as playing a leading role in the sector and wider business world. The Board thanks him for his outstanding achievements in ‘Making Sainsbury’s Great Again’. He leaves a lasting legacy, with the Company stronger than ever.
“We are delighted to appoint a CEO of Mike’s unique talent and experience as Justin’s successor to lead the next chapter of Sainsbury’s history. No one knows Sainsbury’s – or the industry – better than Mike. He has worked hand-in-hand with Justin over the past decade and has a proven track record of success making him the natural choice to take the Company forward.”
Prior to today, City experts were expecting Sainsbury’s upcoming annual results to show earnings at 37p per share.
Following this morning’s price movement the shares may therefore trade on a P/E of 9 and offer a possible income of around 5%.
