Britain’s fourth-largest supermarket chain Safeway admitted yesterday [Tuesday] that it has made a sluggish start to its fiscal 2002.

The company saw an 11% increase in annual pre-tax profits to £355m (US$515.6m) for the full year ended 30 March, in line with market forecasts of £350m to £358m but still lagging major rivals. Safeway, which has seen its stock fall 8% in the last year, is behind sector giants Tesco, Sainsbury and Asda in terms of both sales growth and share price performance.

Like-for-like sales rose 5% throughout the year, increasing 4% in the H2, but sales growth at the company’s outlets has halved in the six weeks since year-end to just 2%, apparently reflecting “tough comparisons” with the same period last year and the major programme of store refits. The work on 71 stores was reported to have caused “major disruption and led the company to book £34m in revenue costs”.

CEO Carlos Criado-Perez insisted in a statement: “As ever, we remain committed to driving strong sales growth and expect performance in the remainder of our Q1 progressively to strengthen as the pace of new format store relaunches picks up.”

“What we have seen is a lot of the pain and none of the gain. The pain comes first,” he added.

Safeway has raised its final dividend to 6.61p per share, bringing the full-year payout up 5% to 9.52p.