Justin King has overseen a rejuvenation of J Sainsbury since he joined nearly three years ago.

When he was appointed, the company was losing market share, its shelves were not fully stocked and its prices were uncompetitive. Sir Peter Davis, his predecessor, had spent billions on new IT and warehouse systems that did not work and the company was being written off by investors.

Mr King cut thousands of jobs from head office, hired a logistics expert to fix the warehouse and distribution problems and ended a disastrous IT outsourcing contract with Accenture, the advisory firm.

Cost savings were fed into lower prices and investment in improving the merchandise range. Sainsbury’s board was overhauled and a three-year sales-led recovery plan was put into action, with a new ethos of cost-saving and innovation.

Halfway through that process, Mr King looks set to hit his target of increasing sales by £2.5 billion by 2008. Analysts are less sure, however, whether he will be able to build Sainsbury’s margins. In November, Sainsbury’s said that gross margins had risen by 0.37 percentage points in the first half, but the supermarket admitted that this was still too low.

Private equity firms’ keen interest in Sainsbury’s suggests they believe that Mr King — or perhaps their own management teams — can drive margins up.

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