Safeway maintains performance despite takeover saga
Supermarket group Safeway today said it had successfully maintained its trading performance, despite the impact of a prolonged takeover saga.
In what is expected to be the company’s last set of results before being acquired by Morrisons, Safeway said sales grew 1.2% in the 28 weeks to October 11, with the figure broadly unchanged on a like-for-like basis.
Profits before exceptional items were £173m (€246.7m), down on £187m (€266.6m) a year earlier because of £8m (€11.4m) of additional pension costs.
The company, which has now been at the centre of takeover speculation for 11 months, described the outcome as “pleasing” and in line with its aim of maintaining a stable business performance.
It added: “Our ability to drive sales has been constrained by the understandable reluctance of some of our suppliers, in the present circumstances, to support our normal promotional programmes.”
During the period, Safeway made £9m (€12.8m) in additional bonus and retention payments, although it said the measures it had taken to motivate staff had been effective in maintaining the company’s performance.
The acquisition of Safeway is expected to reach its conclusion soon with the tabling of a firm offer from Bradford-based Morrisons. It is currently the sole candidate for the business after three of its rivals failed to pass a competition inquiry, and retail entrepreneur Philip Green dropped out.
In order to meet regional competition concerns, Morrisons will have to dispose of about 52 Safeway stores.
Those outlets have already attracted strong interest from potential purchasers, Safeway added.
It said it had received indicative offers for 39 stores and comfortably in excess of its own valuation of £543 million. There has also been “considerable interest” in another 13 outlets valued at £31 million.
In the meantime, Safeway said it would maintain its focus on the key Christmas trading period.
Chief executive Carlos Criado-Perez added: “I am confident we can continue the solid performance we have delivered in the first half.”
