J Sainsbury will take a £550 million sterling ($991 million) hit to profits and halve its dividend this year as it fights for survival amid stiff price competition.
In a wide-ranging business revamp, Britain's third-biggest supermarket chain said today it would cut 750 head-office jobs, hire 3,000 front-line staff and slash prices to compete with market leaders Tesco and Wal-Mart's Asda.
But the one-off profit charge - most of which is write-offs on its huge, white-elephant investments in IT systems and the supply chain - will mean that Sainsbury will take a severe loss this year before taking into account a £275 million profit on the sale of its US Shaw's business.
Sainsbury, which has warned on profits three times this year, said second-half underlying profit would "not be significantly different" from the £125 million to £135 million range forecast for the first half.
In effect, the company looks set to break even if it performs at the top of its own underlying forecast range.
Sainsbury shares, which have underperformed rival UK food retailers by 23 per cent this year, had gained 2.2 per cent to 247 pence by 8.20 a.m. today.