Supermarkets Progress Report

Sainsbury(J) PLC
18 October 2000


SAINSBURY'S SUPERMARKETS - PROGRESS REPORT

At its preliminary results on 31 May 2000, J Sainsbury plc announced that its
top priority would be to focus on improving the trading performance of its
core Sainsbury's supermarkets business.  In a presentation to investment
analysts today, the supermarkets' board will give an update on the progress
made to date and the way it plans to reinvigorate the business.

Sir Peter Davis, group chief executive said 'I am pleased with the progress
that we are making on our three year plan to restore Sainsbury's Supermarkets.
 Our objective is to generate operating margins comparable with the industry
leaders by the end of this investment period.  At the results presentation at
the end of May I said that there were three basic infrastructure investments
that had to be made.  The first was to make a significant update in our
systems; the proposal to outsource IT and systems to Andersen Consulting are
well advanced and will give us a totally new platform for our systems within 2
1/2 years.  

'The second component was to upgrade our depot infrastructure.  I am delighted
that we are able to announce three new centres at Rugby, Hams Hall in the
Midlands and the receipt of planning consent at Waltham Point.  The latter
will give us a 650,000 sq ft depot on the M25 and work has already started on
site.  

'The third element was to upgrade the store estate.  We are currently working
on plans to upgrade the entire estate within the three-year programme and more
detail about this will be given at our interim results presentation on 22
November.

'In trading terms, we are quite clear about our trading strategy.  This is to
offer extraordinary quality at ordinary prices.  All our research shows that
Sainsbury's customers shop with us for quality food and drink and quality is
more important to them than price alone.  However, we are a mass market
operator and we aim to remain extremely competitive on price.  We will price
in line with competition and our key lines will match those of our major
competitors.  We know that our customers appreciate promotions and offers and
we will continue to use them appropriately.

'Over the past six months we have increased our investment significantly in
new product development to upgrade the quality of our products, the quality of
our food innovation and our food integrity.  We are about to launch our 'Taste
the Difference' range of 350 products next month.  Our objective is to be
first for food in the U.K. market.  We will continue to deliver quality food
with mass market appeal which gives outstanding value for money.

'As part of this drive next year we will start increasing significantly the
space available for fresh and chilled products. We will make the space
available by improved display techniques making better use of more limited
grocery and non-food space.  
 
'The success of our flagship store at Cromwell Road shows what we can do when
we try.  I am, however, just as delighted by the success of some of our major
recent extensions which show that customers value the greater emphasis on
fresh foods and the revised Sainsbury branded offer.

'I would like to pay tribute to the thousands of colleagues in the business
who have responded to a very challenging timetable for significant change in
the business. We are also working hard to improve our relationship with
suppliers.  Our new Code of Practice is but one illustration of this.  We are
also working, through the GlobalNetXchange and other internal initiatives to
generate greater efficiencies and cost savings by streamlining our processes.

'Finally, our e-commerce offer 'Sainsbury's to You' is being rolled out and we
expect to achieve 60% of coverage nationwide by April 2001.  This will be
serviced by a combination of picking in 33 stores and two dedicated picking
centres which includes the new Park Royal facility in West London.  We are
also about to launch the strategic partnership with Carlton, which will help
us to create the first interactive TV food shopping channel in the U.K.

'We are quite clear about the scale of change needed in our core supermarkets
business.  This update today demonstrates the radical programme we have put in
place to transform the business over the next three years so that we can
achieve margins that will compare with the best in the industry and make a
real difference to what we offer our customers.  I am confident that we are on
track to achieve our goal of being first for food in the U.K.'

Roger Matthews, group finance director said 'Today's presentation is a
progress report on the supermarket business.  We have no further news today
about the Homebase strategic review; it is a lengthy process which is likely
to take a few more weeks to complete. Current sales and profits of the
Supermarkets are in line with our expectations.  Q2 Trading Figures and our
first half results will be presented at our interims presentation on 22
November.  Our aim is to stabilise Group profits this year before e-commerce,
exceptional items and tax.

'We have embarked upon a major transformation programme with the objective of
delivering substantial cost efficiencies estimated to be £600 million per
annum by the end of the programme and improving like for like sales growth. 
This will enable us to invest in the customer offer and achieve our aim of
improving operating margins.  Capital expenditure will increase over existing
levels but by a very manageable amount estimated at, on average, a further
£150-£200 million per annum for each of the next three years.  This will be
funded by a strong balance sheet, robust operating cash flows, together with
sale and leaseback and outsourcing alternatives.'

For enquires

Investor Relations: Roger Matthews/Amanda Cobb 0207 695 6215

Press Office: Jan Shawe/Pip Wood 0207 695 7295