British supermarket chain J Sainsbury Plc issued its second profit warning in four months yesterday, sending its shares tumbling six per cent, as chairman Peter Davis quit a year early amid a row over his bonus.

Mr Davis's abrupt departure, which Sainsbury said was a mutual decision, comes after investors threatened to revolt on learning he would be paid a stock bonus for last year worth over £2 million, despite a fall in profits.

Sainsbury said it expected pre-tax profit for the year ended March 2005 to come in below a market consensus forecast of £505 million as it cut prices and improved stock availability in a fight for market share with bigger, more successful rivals.

The company's sales have fallen one per cent during the past year, according to independent market research, in stark contrast to an 11 per cent surge by market leader Tesco and an eight per cent rise by second-placed Asda.

"Clearly sales performance... is well behind the average being experienced in the market so therefore we are continuing to lose market share," Chief Executive Justin King told reporters in a conference call.

Sainsbury, once the market leader but now Britain's third-biggest food retailer, said Davis would be succeeded on July 19 by Philip Hampton, a former finance director at British bank Lloyds TSB and telecoms company BT.

One top-ten shareholder welcomed Mr Hampton's appointment, and said his lack of retail experience was not an issue.

"Hampton has a reputation for establishing shareholder value, but we have to afford him the time to consider what to do next at Sainsbury," said Tim Rees, fund manager at Insight Investments.

Investors and analysts, still smarting from a profit warning in March, said the fresh warning took them unawares, coming so soon after the firm's annual results in May, when the grocery chain confirmed a fall in earnings.

"The profit warning comes as a surprise being so soon after the results," said Paul Smiddy, retail analyst at investment manager Baird.