Sainsbury's Shares Tank as It Launches a Strategic Review and Brushes Away Accounting Blunder Concerns

The boss of Britain's J Sainsbury said that the grocer is "100% confident" in the way it accounts for commercial incomes, after its biggest rival Tesco recently admitted that it had overstated its profits by £250m.

Sainsbury's new CEO Mike Coupe, who took over from Justin King recently, also added that UK market conditions are "the most challenging I've seen in my 30 years in the industry."

However, shares tanked by falling over 4% after he admitted that the group will review its dividend policy as part of a major "strategic review" of the whole company.

The stock price is at 241.20p within the first half an hour of trading.

The retailer revealed on market open that it has had to cut its full year sales forecast after trading fell sharply in the second quarter of this year.

Growing competition from budget supermarkets led to the group's slowest pace of growth in more than 20 years.

Sainsbury's said sales at stores fell 2.8%, excluding fuel, in the 16 weeks to 27 September.

"A shift in consumer behaviour toward frequent convenience shopping has been swiftly acknowledged with the opening of 23 'local' stores in the last quarter," said Marc Kimsey, senior trader at Accendo Markets.

"The 'brand match' policy has been expanded and simplified to assure customers of a good deal. A detailed strategic update is forthcoming and crucially the dividend remains intact leaving the company well positioned versus sector peers.

"The near term is likely to remain turbulent for the share price but at these levels the medium term looks bright. Don't be surprised to see the Qatari bid story resurface."