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CHATLINES

01 August, 2004
It'll all end in tears
Page 10 
I read with interest in the July edition that Sainsbury’s is rather reliant on sales growth from buoyant trading in petrol to show the City the company is alive and well. Who is it deluding? The City, its shareholders or the management itself?
JS has been guilty of ‘buying’ market share, and with it increased revenue over the past few months, but this has inevitably hit the bottom line as witnessed by yet another shock warning on profits – is it the second or third such warning this year?It has been pricing at very competitive levels and offering further discount with 3ppl for more than £50 spent in the store. It is actually selling at below the delivered price it’s paying to BP, which is its sole suppler on contract at present.It seems that part of the self-delusion is encouraged by its apparent practice of charging any fuel discounts to the stores rather than to its fuels business!We have all seen these futile and expensive attempts to increase sales with cheap prices, but it inevitably ends in tears – look at the appalling state of Esso’s property portfolio post Pricewatch, so there can be no sympathy for the management at JS with its falling profits – it has only itself to blame. Brian MaddersonGeorge Hammond plcDover, Kent