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LONDON - Underperforming British grocer J Sainsbury today confirmed a plunge in annual profits, according to a Reuters report.
A profit warning in March prepared investors for the prospect of two years of lower profits as new c.e.o. Justin King, only seven weeks into the job, attempts to stem a steep loss of market share. "We have not stayed as sharp on pricing as we should have done," King told Reuters.
Earlier this month King began cutting prices at the chain, which is positioned as an upscale alternative to Tesco and Asda. Sainsbury lost market leadership to Tesco in 1995 and is now third, having been overtaken by Asda in 2003.
Underlying group profits before tax slipped 2.9 percent for the year ended March 27 to £675 million (US $1.2 billion), as anticipated. Supermarket turnover rose 2.2 percent to £15.3 billion (US $27.1 billion).
In the second half of the year operating profits at the core supermarket chain fell 12.2 percent on limp sales as rivals Tesco and Asda lowered prices to defend their positions ahead of William Morrison's takeover of Safeway, creating a more powerful fourth competitor in the industry.
Analysts say the danger is that Sainsbury might trigger a price war that it can't win because it lacks financial muscle.