Morrisons' sales growth excels

Chairman Sir Ken Morrison still hopes to buy Safeway

Supermarket chain Morrisons has unveiled strong sales growth figures, strengthening its hand in the battle to buy rival grocery chain Safeway.

Morrisons said sales including petrol rose 8.4% during the first 14 weeks of 2003 compared with the same period last year, up from 7.6% during the first five weeks.

The growth in sales reflected an increase in both customer numbers and average transaction values, the company said.

The figures suggest that Morrisons' sales are growing more quickly than its bigger rivals, helping to dispel any doubts over its ability to absorb Safeway.

Earlier this week, Safeway unveiled sales growth of just 0.8% for the first six weeks of its financial year.

Five-way fight

Mark Hughes, a retail analyst at Numis securities, described Morrisons' latest growth figures as "encouraging," especially since they stemmed mostly from sales of food.

Other supermarkets have been increasingly relying on clothing and other non-food items to increase revenues.

Morrisons shares were up 1.6% at 187p in late afternoon trade.

Morrisons, Britain's fifth biggest supermarket chain, is fighting it out with the sector leaders - Tesco, J Sainsbury and Asda - to buy up fourth-ranked Safeway.

It is the only one of the four so far to have tabled a firm bid - a share-only offer worth £2.9bn.

But competition watchdogs are investigating the market impact of a Safeway takeover by one of the other supermarkets, with a decision expected in August.

Bhs and Arcadia chief Philip Green, who is also thought to have expressed an interest in Safeway, is the only potential bidder to have been exempted from the Competition Commission's enquiry.