Justin King, the chief executive of J Sainsbury, issued a rallying call to nearly 1,000 senior staff yesterday as he prepared for one of the biggest challenges of his three-year tenure at the supermarket chain.

In an internal memo sent out soon after the Qatar Investment Authority (QIA) scrapped its £10.6 billion takeover bid, Mr King urged his lieutenants to focus on doing what they do best.

“So, what next?” he said. “I always say this, but it’s true: for us it has to be ‘business as usual’. “We have over 16 million customers who come to shop with us every week, and they have high expectations of the service we provide.”

Industry experts emphasised that Mr King will need to be even more confident when he faces analysts at Sainsbury’s head office in Holborn, Central London, next Wednesday and presents half-year results. Sources at Sainsbury’s rivals said that the chief executive, who apparently stood to land a £40 million incentive package if the Qatari-backed takeover bid had succeeded, faced a huge challenge in drawing a line under the chapter and refocusing minds on the key Christmas season.

They assert that there have been growing signs in recent weeks that nearly nine months of takeover speculation have finally begun to disrupt Sainsbury’s business, given fierce competition from Tesco and Asda. Last week Asda announced £150 million of Christmas price cuts.

A source told The Times: “The stores have seemed a bit disorganised and there’s just been a feeling about that Tesco and Asda are pulling away again.

“But Justin’s biggest challenge will be motivating everyone. There were some senior managers there who expected to make a small fortune out of this takeover.”

Sainsbury’s most recent trading statement, given at the start of October, revealed that like-for-like sales growth had slowed sharply, to 3.1 per cent, in the second quarter to October 6, after 5.1 per cent growth in the previous three months.

At the time Mr King blamed the “very poor weather” in June and July and insisted that he expected buoyant Christmas trade. He added that despite the second-quarter slowdown, it still marked the eleventh consecutive quarter of like-for-like sales growth at the business, which suffered its first loss three years ago.

Sainsbury’s insisted yesterday that the takeover interest this year was a reflection of the success of the “Making Sainsbury’s Great Again” turnaround strategy that was launched in 2005. The latest phase of the turnaround plan came in May, after the collapse of a takeover bid led by CVC, the private equity giant. Then, Mr King unveiled a “step change” in the programme and said that he was targeting an additional £3.5 billion of sales and a 10 per cent increase in sales space over the next three years.

However, in a note yesterday that advised investors to dump Sainsbury’s stock, Clive Black, a Shore Capital analyst, said that it was hard to justify a share price of more than 400p. He added that despite the near-£9 billion property estate on the grocer’s books, its shares could plunge to as low as 350p.

Jonathan Pritchard, an analyst with Oriel Securities, said that the share price was under “severe pressure”, adding that he could not justify a share price higher than 440p.

However, Philip Dorgan, the veteran retail analyst at Panmure Gordon, raised his forecasts for the group in one of the most bullish notes on Sainsbury’s yesterday. He expected the group to report pre-tax profits of £501 million for the financial year to March 2008, up from previous guidance of £453 million.

Mr Dorgan predicted that the half-year results next week would reveal a 27 per cent jump in pre-tax profits to £240 million. He said: “The rather inevitable retreat by Delta Two will take the shares down, but not as low as worst fears.”

Express checkout

January 2007 Market speculation mounts that private equity groups are circling the supermarket

February 2 Founding family sells 13 per cent of holding. The Times reports that CVC is working on plans to take the company private.

February 2 CVC, KKR and Blackstone tell the stock market that they are in the “early stages of assessing a possible bid”. Shares rise 13.8 per cent, or 61p, to 507p

February 28 Stuart Rose, M&S chief executive, says he is considering a bid.

March 14 The Times reports that advisers to CVC and its partners have approached J Sainsbury with a cash offer

April 10 The family continues to block a private equity takeover, despite the consortium raising its offer by 20p to 582p a share

April 26 Delta Two acquires a 17.4 per cent stake

July 18 Delta Two tables a preliminary offer of £10.44bn

August 8 A meeting between Sainsbury and Delta Two ends inconclusively

October 8 Delta Two signals firm £10.6bn offer could be imminent

November 5 Both sides confirm that Delta Two is pulling out of bid

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