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Thursday, 25 November, 1999, 09:48 GMT
Safeway profits slump 20%
Safeway store Safeway is planning a revamp of stores

Supermarkets group Safeway has announced a 20% fall in profits, blaming pressures from the price war with its larger rivals.

But the smallest of the Big Four chains in the UK said it had begun to gain market share.

Results for six months to 16 Oct (1998 in brackets)
Pre-tax profit: 150m(187.4m)
Turnover: 4.05bn(3.97bn)
Int Div: 2.64p(4.4p)
Safeway's newly appointed chief executive, Carlos Criado-Perez, said the group's profits had come under pressure after it invested more in reducing prices and hiring more staff.

"Safeway has under-achieved," said Mr Criado-Perez.

It was now focusing on introducing its new strategy, which would see it become the "best for fresh", "first for availability", and feature new-look stores.

Mr Criado-Perez said Safeway had been outperforming its rivals in the past 12 consecutive weeks with strong like-for-like sales growth, which excludes purchases made in new stores.

In the July-September period like-for-like sales rose by 2.4% on the previous year, compared with a 0.3% slump in April-June.

Safeway said its share of the national market had risen to 9.5%, up by 0.2% on the same time in 1998.

Farmers unhappy

Mr Criado-Perez is a former executive at Wal-Mart, the giant US discounter which has recently bought Asda, the UK's third largest supermarket chain.

Safeway has been coming under increasing pressure from the cut-throat price battle being waged by its larger rivals Tesco, Sainsbury's and Asda.

Its results come hot on the heels of gloomy half-year earnings figures released by Sainsbury's on Tuesday which showed it was also being hit hard by the price war with profits sliding 29.5%.

Mr Criado-Perez joined the group on 15 August as chief operating officer and took the top job on 3 November, replacing chief executive of six years, Colin Smith.

The strategy to offer a larger range of fresh food and cheaper prices has led to the National Farmers Union reporting it to the Competition Commission.

It has protested at the chain's demand that it wants payments of 20,000 for products to be included in its new promotion.

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See also:
18 Nov 99 |  Business
Safeway faces cash demand probe
23 Nov 99 |  Business
Sainsbury profits slump
11 Nov 99 |  The Company File
Somerfield slims down
21 Sep 99 |  The Company File
Tesco surges ahead
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