UK Safeway profit up

May 16, 2001
Web posted at: 0715 GMT

LONDON (CNN) -- The UK's fourth-largest supermarket chain Safeway said full-year pretax profit rose by a third as it increased food sales.

Safeway posted pretax profits for the 12 months to March 31 of £314.5 million ($446 million), at the high end of analyst expectations, compared with £236.1 the previous year.

The company said net income rose 34 percent to £224.3 million from £167.2 million in 2000.

Safeway has been involved in a price war with its three larger rivals Tesco (TSCO), Sainsbury (SBRY) and Asda, sparked after Asda was acquired by the world's largest chain, Wal-Mart (WMT: Research, Estimates) of the U.S.

Under former Wal-Mart executive Carlos Criado-Perez, Safeway reorganised its sales strategy, scrapped its customer loyalty card, cut prices across the board and introduced new products.

Safeway has also slowed its expansion – opening no new stores last year – and instead invested in upgrading its existing store base. Investment in its stores will rise to more than £300 million this year, the company said

Sales rose 7.3 percent to £8.7 billion from £8.2 billion, and increased more than 5 percent in stores open more than a year.

"Our upgraded produce, bakery and delicatessen departments, which are now present in most stores, together with our improved meat and fish counters, have become important contributors to our sales and profit growth," Safeway said.

Safeway shares fell 1.6 percent to 333.75 pence in early London trade.

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Safeway

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