Announced last week, overall sales in the year to 27 March were flat at £17bn. Pre-tax profits were down from £667m to £610m after exceptional costs of £68m. And there’s no sign of things looking up in the short-term – pre-tax profits are set to drop below £500m this year.
Nonetheless, Sainsbury’s has insisted that it does not need a change of strategy despite its underperformance, and Matthews has vowed that the group would be more competitive on prices going forward.
Chief executive Justin King, who stepped into the role two months ago, remains bullish for the future, insisting that the ailing group is on course.
King, a former head of food at Marks & Spencer, blames an ‘inward-looking’ culture for a slide in service and availability in the stores, which has sent shoppers scurrying to rivals Tesco and Asda. King is taking direct control after the exit of supermarket-arm chief Stuart Mitchell, who is leaving with a £600,000-plus payoff.
While Matthews’ job may be safe, he’s certainly got plenty on his plate.
As if stomaching the balance sheet wasn’t hard enough, the 49-year-old is now faced with placating his power-hungry boss, and forging an all-important ally. Fortunately for Matthews his efforts appear to have quite literally paid off.
Because of poor earnings, the company has decided that directors will not get bonuses apart from a ‘special’ payment to its finance director.
The special discretionary payout was said to reflect Matthews’ work through the year, including the sale of Shaw’s, the US business, and the deal to buy back the group’s IT assets.
The only other director to receive a bonus was chairman Sir Peter Davis, who despite ongoing woes, received £864,000 out of a possible £1m in shares.
And this despite the recovery plan instigated by Sir Peter, which saw Sainsbury pump £3bn into modernising systems and depots, that so far has obviously failed to spark sales.
Even a PR stunt alongside the publication of its results left executives with egg on their faces. In an attempt to prove to journalists that its food is still up there with the best, it organised a blind tasting between its own and Tesco’s products. Only problem was that Tesco won the bout hands down.
Matthews joined the supermarket chain from contract catering and healthcare company, Compass Group. When he left some years later, he held the role of group managing director and finance director. Prior to that, chartered accountant Matthews cut his teeth at GrandMet.
He is also a non-executive director of Zenergy UK Limited – almost certainly not a turn up and pass the biscuits sort of role, but if it were, his current position would certainly come in handy.
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