THE manner in which Philip Hampton joined one of the biggest corporate names in Britain was not the behaviour expected of a level-headed finance director.

The studious-looking executive joined J Sainsbury rather hastily, he admits, signing the contract only a few weeks after he was first approached. He had never worked in retailing — not even packing shelves as a teenager — and it was surely a leap of faith to take on this stumbling giant. A year ago the City had labelled Sainsbury’s a business in decline, destined to be taken over by a private equity bidder. The boardroom was riven with division, as Sir Peter Davis, the group’s chairman at the time, struggled to retain investor confidence after spending more than £3 billion on a failed turnaround attempt. Hampton arrived amid the furore over Davis’s £2.4 million bonus and the appointment — and swift withdrawal — of Sir Ian Prosser as chairman.

But now, sitting in Davis’s glass-walled corner office, Hampton claims that Sainsbury’s is doing too well to be a serious bid target and can overtake Asda to become the UK’s second-largest supermarket once again. Is he sure? He says that Sainsbury’s has recently increased its market share, and figures show that it is growing more quickly than Asda for the first time in a decade.

However, Hampton says that there is still much work to do and that Justin King, the chief executive, cannot solve all the retailer’s problems “with a flick of the wrist”. But price cuts and efforts to improve the availability of merchandise are paying off. Hampton says: “I am pretty careful about things and I wouldn’t have come to a company which I didn’t think had an obviously solid position in the market — it’s been around for 130 years. The brand recognition and the brand values, despite difficulties in the trading performance, have remained strong.

“I reached the conclusion reasonably quickly that if the business was properly focused on its core strengths and core skills, it was clearly capable of significant recovery.”

The chairman, who has overseen the restructuring of ailing British institutions from British Gas to BT, says that he was looking for a new challenge. Given that Sainsbury’s has underperformed for years in a sector of which he had no experience, Hampton says the position had many challenges.

Unlike Davis, who was brought back to Sainsbury’s from his job at Prudential at the insistence of the supermarket’s family shareholders, Hampton was an outsider. Perhaps that made his first task easier: to sort out the bickering board and negotiate a payoff for Davis.

Keith Butler-Wheelhouse, the non-executive director who headed Sainsbury’s remuneration committee, and Lord Levene of Portsoken, the senior independent director, were soon on their way out. Since then Hampton has brought in Bob Stack, of Cadbury Schweppes, and Gary Hughes, of Emap, and has compiled a shortlist for a senior independent director.

Considering that Hampton had never been a chairman or a chief executive before, he seems to have applied himself with aplomb. He sought advice from David Webster, the former Safeway chairman who now heads InterContinental Hotels, before arriving at Sainsbury’s and has clearly spent time thinking about what his role should be. He says: “The critical thing a chairman’s got to do is play a major part in establishing culture and values and integrity.” Hampton says that Sainsbury’s board under Davis “fell out pretty decisively” and was not functioning well. Sainsbury’s needed some “shock treatment”, and implementation of a new incentive scheme and the ousting of underperforming senior managers has laid the foundations of a new business culture.

The lean, down-to-earth Hampton could not appear more different from his rotund, opera-loving predecessor. They both enjoy sailing, though, but friends say that Hampton’s nippy yacht, which he likes to sail alone, is less than a quarter the size of Davis’s £3.5 million boat. One would guess that Hampton will be equally as frugal with his spending at Sainsbury’s, where Davis was happy to splash out in pursuit of modernity.

Levene, who recruited Hampton, says that this no-nonsense approach was part of his attraction. “He has a reputation for very clear thinking and speaking his mind, and is good at getting things done and understanding how they should be done at places which have had some problems,” Levene says.

However, Hampton seems to have little patience when others do not share his vision. He swiftly left Lloyds TSB, for example, after a fallout over strategy, but denies that the trigger was the fallout over his attempts to cut the dividend. “It was certainly nothing to do with the dividend,” he says, adding that he “did not exchange cross words” with anyone on the board. Hampton, who feels strongly that a business needs a sense of momentum, says that Lloyds TSB needed to be more radical and discover new ways of finding growth.

The task now for Sainsbury’s management is to tackle the operational problems that led to gaping holes on the shelves. But perhaps Hampton’s and King’s biggest challenge will be to determine what happens beyond the basic recovery. “I absolutely accept there is a long-term challenge in what we do when we’ve got the business firing on all cylinders, but it’s premature to start thinking about that,” Hampton says.

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