As straplines go it was as much an admission of past failing as a bold statement of intent. The 'Making Sainsbury's Great Again' plan vowed to address the issues that saw Sainsbury's outmanoeuvred by first Tesco and then Asda as the former favourite lost its way.

The sales-led plan, launched in April 2005, included a three-year target of £2.5bn in extra sales, and talked candidly of Sainsbury's flaws: its inward focus, high cost base and poor availability. But commentators didn't give the plan a chance. The Daily Mail described it as "fanciful". The Telegraph said it was "a brave investor who bets on Making Sainsbury's Great Again". "MSGA? Frankly, we doubt it," The Guardian added.

Three years down the line and, while the share price has taken a hit after the collapse of a private equity bid, the picture at an operating level is much more rosy. The company hit its three-year sales target three months ahead of schedule, with sales up by £2.7bn over the full period after 13 consecutive quarters of like-for-like growth. Analysts say it is well placed to deliver on its promise of at least £400m in operating cost efficiencies. It has recently moved to improve its freehold mix by entering a joint venture with British Land. And the improvement in staff morale is reflected in everything from the vast improvement in its own-label, organic and premium ranges to a strong recent performance in The Grocer 33.

"They've done a fantastic job of rebuilding the brand," says Jonathan Pritchard of Oriel Securities. But reservations remain. Sales have only just returned to levels seen in 2003, while profit margins are well below its big four rivals and - significantly - still not back at the levels seen in 2004.

It's all a far cry from the heady days of 1989, when margins were running at 7% and the share price rode even higher.

"He (Justin King) has done a better job than people envisaged," says a City source. "The problem is, all he is doing is taking the margin back to where it was when he inherited it."

In the meantime, the latest TNS data shows its market share falling from 16.2% to 16%, with Morrisons not only stealing market share but improving its profit margins to 4.7% in its prelims -far ahead of the margins that analysts are forecasting for Sainsbury's.

Analysts are also concerned that Sainsbury's could be vulnerable as the economy falters, given its low margins, relatively large cost base and premium positioning. Strides have undoubtedly been made in improving operational efficiencies, but the benefits of relocating its headquarters to Kings Cross are relatively small and won't be realised for several years.

Availability is another vexed issue. It was down to 95.6% in the year to June 2005, according to The Grocer 33 study - having been described by King, in October 2004, as "a significant detractor to recent sales performance" - but improved to 97.1% by June 2007. But it fell again to 96.4% between June and December 2007 - with only Somerfield faring worse. As King points out, however, there's been a marked improvement in 2008, coming in first or equal first five times in the 13 weeks since the turn of the year.

A new plan, which overlaps the MSGA plan by one year, has set out ambitious three-year targets to take Sainsbury's from recovery to growth. The company plans to deliver a further £3.5bn sales growth by 2010, which would take sales to £22bn, and will significantly expand its online capabilities.

Bottom-line targets, however, are again notable by their absence.

Sainsbury's best prospects may lie in non-food, where sales continue to grow at about three times the rate of food, admittedly from a small base. In the context of a stalling economy, however, the target of £3.5bn sales growth looks a tough ask.

It was also noticeable that members of the Sainsbury family have been among heavy sellers in the stock in recent weeks, as the share price fell to 347p, against a high last year of nearly £6.

So: is Sainsbury's great again? The question prompts a cautious response from chief financial officer Darren Shapland. "It's better than it was," he says. "We're excited to have hit targets no-one thought we could achieve, and we believe 3-4% sales growth is achievable over the next two to three years.

"We've come from a low point in 2004/05 where profitability and sales were not acceptable. Now profit and sales are at an acceptable level."

Making Sainsbury's Acceptable Again may not have the same ring, but it will do for now.

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