Safeway profits hold up in bid race
FIRST-quarter profits at Safeway will match the previous year's figure, excluding bid-related costs, despite the distractions of the ferocious five-way battle for control of Britain's fourth-largest supermarkets group.
Chairman David Webster described the performance as 'a remarkable achievement in current circumstances'.
But group like-for-like sales have fallen 0.6% in the first 12 weeks of the financial year. They were 0.8% ahead in the first six weeks but Safeway had already warned of a slowdown, as comparisons included the boost last year from football's World Cup and Golden Jubilee-related sales, together with the launch of four megastores.
Total sales for the quarter were ahead by 1.1%. Webster said cashflow, working capital and stock levels had also improved.
The group, which has 480 stores, has put its refit programme on hold and cut back costly price promotions in an attempt to stabilise performance as the bid battle rages.
Today's figures were pretty much as analysts had expected, and the shares gained 1p to 263p.
Meanwhile, the 150 Safeway shareholders attending today's annual general meeting at the Dorchester Hotel in London had to run a gauntlet of 30 protesters to get into the meeting.
Largely from Friends of the Earth, they criticised the potential takeover of the group because, they claim, it will jeopardise local shops and farmers, and reduce consumer choice.
There were also protests against directors' compensation and contracts - several are on two-year rolling contracts and the board stands to collect some £5m if the group surrenders its independence.
Ahead of the meeting, Webster defended the contracts, pointing out that directors were not awarded share options last year and that, because of uncertainty surrounding the group's future, it was not possible to renegotiate contracts. 'We are in unusual circumstances,' he said.
Safeway paid out £5.5m in 'loyalty bonuses' to staff last year in an attempt to stop them leaving. Webster said staff turnover had risen 'slightly' over the first quarter. The group also paid out some £17m in takeover-related costs last year.
The Competition Commission is due to complete its report into the bids from Wm Morrison, Tesco, Sainsbury and Wal-Mart-owned Asda on 12 August, although the final verdict might not come until the end of September.
Bhs billionaire Philip Green, who has no food retail interests, is not included in the investigation. He is expected to wait until the Commission's verdict before deciding whether to make an offer.
