J Sainsbury plc Reports: 2003-2006
A Brief Backgrounder
J. Sainsbury plc owns Sainsbury's Supermarkets (hereafter Sainsbury's), the U.K.'s third largest retailer after Tesco and Asda. For many years since it opened for business in 1869, Sainsbury's was the country's biggest supermarket, the undisputed market leader. A series of mis-steps allowed competitor Tesco to catch up in 1995. In 2003, Asda passed Sainsbury's, relegating the latter to third position where it stays.
Sainsbury's is now playing catch up, regaining market share one percentage point at a time. A publicly listed corporation since 1973, the company is on the renewal trail as it attempts to regain its leading position in the industry. Using a combination of common management tools in a wide range of areas, from stocking its shelves full with items customers want to buy to executing on a complete revamp of its information technology and supply chain management systems, a new senior management team is revitalising the whole organisation from top to bottom.
This brief history helps us analyse the period 2003 to 2006, during which Sainsbury's hit the dust with their first-ever revenues slump in history (in the year ended March 2005) and then as nimbly picked itself up and began staging a comeback. We can learn how they are doing by studying the company's annual reports which are the "official" snapshots of the whole corporation each year. Just like any other company at the mercy of its stakeholders (Freeman, 1984), Sainsbury's is expected to behave to satisfy everyone.
First Question
Identify significant areas of the accounts for 2006 where judgment has been used in determining the appropriate accounting policy for the company (for example depreciation of ...