A MANAGEMENT shake-up is under way at Sainsbury's, which has seen its profits slide by 2.9 per cent.

New chief executive Justin King announced the shake-up yesterday after profits for the year to March 27 fell to £675m.

The UK's former number one supermarket chain - which recently bought North-East convenience chain Bells Stores, as well as a number of Safeway shops in the region - has seen its figures suffer in the face of pricing competition from rivals. Its own restructuring campaign has also hit it hard.

Among management changes, Stuart Mitchell will step down as managing director of the main supermarket business - a move that will enable Mr King to take control of the day-to-day running of the operation.

The company said the lacklustre performance reflected a three-year modernisation programme, including an overhaul of IT and distribution systems.

Anthony Platts, assistant director at investment manager Wise Speke, said: "As this refit programme comes to a close, Sainsbury's is now in a stronger position to refocus on key areas, such as pricing, in its fight to retain the number three position in this incredibly competitive market.

"The acquisition of Safeway's flagship Darlington store shows that Sainsbury's has used its financial clout to cherry pick the best stores to increase its exposure to North-East shoppers."