Safeway pays the price for uncertain future
the focus of an intense bidding war by all its main UK rivals - has
taken its toll on results at the company, which is now cutting back
on its store refit programme.
The uncertainty over the future of the Safeway supermarket chain - the focus of an intense bidding war by all its main UK rivals - has taken its toll on results at the company.
In a trading statement issued earlier this week, the company said that it was predicting full-year profits of £335 million (€486m) before exceptional items, some £20 million lower than some recent estimates but within current market forecasts.
Safeway announced in January that it had agreed to sell the company to smaller rival Morrisons but has been unable to complete that deal as a result of rival bids from Tesco, Safeway, Asda and entrepreneur Philip Green. The four retail bids have all been referred to the Competition Commission, and a decision is not expected until August. Green, whose bid was not referred, could of course make an offer for the chain before that time.
Carlos Criado-Perez, Safeway's chief executive, said: "Our priority now is to continue the smooth running of our day-to-day operations in stores, depots and support functions in order to meet the needs of our customers. To help us to do this we have put in place appropriate measures to retain and motivate our people, with particular focus on key staff in head office, where we are pleased to report that we have not experienced any increase in staff turnover."
Not surprisingly, the company has also adopted a more cautious approach to investment in large-scale projects. "We are planning to open five new stores in the new financial year, in addition to the six opened last year, and maintain a modest forward development pipeline. We have however scaled down the reformatting programme and focused it on a small number of megastore and other store extensions.
"A significant number of projects have been deferred and consequently the group's capital expenditure for 2002/03 totalled around £340 million, somewhat lower than earlier expectations. We are planning a spend of around £230 million in the current year."
