The supermarket chain reported its quarterly results today (which could soon be a thing of the past, if Delta Two gets its way) and said that like-for-like sales grew by just 2.6% over the summer, less than expected. Like rivals Morrison and Tesco, it blamed the dismal weather for keeping customers away – a problem it didn’t have last year, when the sun was shining and the World Cup was adorning our TV screens.
On the other hand, Sainsbury’s still managed to outperform its competitors, showing that Justin King’s turnaround plan continues to bear fruit. Sales growth in the first half was higher than Tesco, while the group is now only £200m short of the £2.5bn sales growth target King promised to hit by March 2008.
So it’s no wonder that the UK’s pathetic excuse for a summer doesn’t seem to have dampened the ardour of the Qataris, who continue to inch slowly towards a formal offer for the chain.
The Sainsbury’s board seems likely to recommend Delta Two’s offer, which is expected to be pitched at 600p per share – the minimum level specified by the Sainsbury family earlier this year.
However, the Qataris’ main job now is to get the pension trustees onside. The issue nearly scuppered the private equity offer earlier this year, and the Sainsbury family have already promised not to support the bid until an agreement has been reached.
The stakes are high – if the bid fails, Delta Two will take a massive loss on its 25% stake as the supermarket’s share price plummets. So unless they can make the pension problem go away very soon, the terrible UK weather might be the least of their problems.