One profit warning might be unfortunate, two could be considered careless, but a third since March might suggest calamity for Sainsbury.

No formal profit warning has been made today by the retailer, who this morning saw Merrill Lynch cut its profit forecast for the second time in five days ahead of the supermarket chain's key business update on October 19. But the message is just the same, and Sainsbury shares suffered accordingly.

Merrill analysts said in a note that they had made a precautionary cut of around 10 per cent in its forecast on Monday. But "it would appear we have not gone far enough," the analysts added this morning.

"The company has helpfully pointed out to us that our previous £177 million first-half profit before tax forecast is 'high'." Don't you just love the use of "helpfully" in that statement?

Merrill thus lopped a further 10 per cent off their forecast and Sainsbury's became the biggest fallers on the FTSE this morning. "We assume gross margin pressure has been acute. Unsuprisingly we still we see no merit in the shares at this price," Merrill said.

Earlier this week, the supermarket's house broker, UBS, had also cut its profit forecast, setting up Sainsbury's new chief executive Justin King for an uncomfortable few days before he makes the trading update presentation.

"Every day we get closer to the mother of all profits warnings," Philip Dorgan, at Panmure Gordon, said last week. "The fundamentals of the company have all deteriorated - including the supply chain problems and underlying sales. It couldn't have come at a worse time and the business will be under enormous stress ahead of Christmas."

Shares that once nearly touched 450p and began this year trading at 315p were down to less than 250p at lunchtime today, with some analysts suggesting that investors ought to get out now, before it is too late, with 200p viewed as not an impossible level for the stock to reach.

With Sir Peter Davis having already spent £3 billion on restructuring the company, it is hard to see what scope Mr King will have for change when he makes his announcement. Suggestions of job cuts and store closures would appear to be high on the list, although the possibility of property sell-offs seems to have diminished with the departure of Desmond Taljaard, the property director, to join Whitbread.

With the Sainsbury family, which still holds 35 per cent of the stock, apparently having given Mr King until May to turn things around, his presentation in 11 days' time had better be good.

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