Modest start at Safeway

By THIS IS MONEY
Updated:

 

Supermarket chain Safeway today revealed its financial year had got off to a modest start with profits slightly ahead of last year.

Safeway, the UK's fourth largest supermarket, said total sales had grown by 0.8% in the 14 weeks to July 10 despite it continuing to endure tough trading conditions.

But stripping out sales made in new stores, revenues were down 0.3% compared with the same period last year.

'Despite tough sector trading conditions, profits in the first quarter are a little ahead of last year, reflecting the success of our efforts to contain costs and the benefit to our sales mix of the improvements we have made to key product categories,' Safeway said.

'Our sales have strengthened in recent weeks, moving back in line with the industry average after a period of underperformance during which we faced tough comparisons with the launch last year of ABC double and triple points.'

Safeway, which holds its annual general meeting today, warned trading conditions were likely to remain challenging with the impending entry of US giant Wal-Mart to the UK market following its takeover of rival Asda.

Safeway's trading update follows its launch yesterday of a massive £30 million price cutting campaign which has slashed 20% off the cost of more than 1,000 products.

The Price Cut '99 campaign is the first part of a series of initiatives which aim to sharpen Safeway's competitiveness and reduce costs.

It comes just a week before the Government is expected to reveal details of a price comparison survey with other countries.

Safeway holds about 9% of the UK food retail market, behind Tesco, J Sainsbury and Asda.

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