Morrisons ends turbulent year on a high
bid for larger rival Safeway made last January was not finally
approved until December, an 11 month period in which Morrisons'
continued improvement was in stark contrast to that of its takeover
target.
But with Morrisons' bid finally cleared - and, perhaps more importantly, rival bids from other chains blocked - by the UK authorities, the Yorkshire-based chain is looking to fast-track the takeover and get on with the business of rolling out its highly successful business model at Safeway's stores.
Just how successful this model is is reflected in the sales growth figures issued by the company today. In the six weeks ended 4 January - the key Christmas period - total takings were 16 per cent higher than last year, Morrisons said, boosted in part by the addition of nine new stores.
Perhaps helped by the overwhelmingly positive press that Morrisons had received all year, praising its low-price offering and innovative store design strategy, the company's stores saw a significant increase in the level of customer footfall over the Christmas period.
On average, each store saw 4.4 per cent additional customers spending an average of 4.8 per cent more compared to Christmas 2002, leading to an increase in the average store take of 9.4 per cent, the statement said.
But it was Morrisons' like-for-like sales growth which has consistently impressed analysts in 2003, and the Christmas period was no exception. Excluding both new and recently closed stores, like-for-like sales increased by 10.2 per cent during the six-week period, or by 9.6 per cent excluding petrol.
There are just three weeks left in Morrisons' 2003 financial year, and the indications are that the uncertainty over the Safeway takeover will have only a minimal effect on the company's performance. The statement said that takings for the first 48 weeks of fiscal 2003 were 15.4 per cent higher than in 2002, with like-for-like sales some 9.3 per cent ahead.
The 2004 fiscal year performance is likely to be harder to predict, with the unenviable task of integrating the Safeway business - which is entirely different than Morrisons' - likely to have an impact.
Morrisons said it hopes to at least simplify the takeover itself, asking for permission from the UK authorities to carry out the merger way of a scheme of arrangement, a relatively common route for takeover bids where both parties are known to be in favour.
This scheme would allow the merger to go ahead with just 75 per cent support from shareholders instead of the more usual 90 per cent, and could allow the takeover to be completed by early March, several months ahead of the likely completion date via the more traditional route.
