UK supermarket group Wm Morrison has said the performance of its Safeway stores continues to decline, but sales at converted stores appear to be picking up.

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The company said combined group operating profit, pre exceptionals, was £170.3m (US$311.2m), as strong results from the Morrisons chain were dragged down by a continuing slump in Safeway’s performance.


In the Morrisons core business, like-for-like sales rose 8.9%, or 14.2% including petrol. Total sales were £2.61bn, compared to £2.48bn a year earlier. Operating profit pre exceptionals came in at £209.3m, up from £130.5m in the year-ago period.


However, the Safeway business, which was acquired by Morrisons on 8 March, continued to decline. Like-for-like sales fell 7.9% including petrol and the business posted an operating loss of £39.0m.


Morrisons said the integration of Safeway was progressing well, with 41 stores converted to date, and 56 stores due to be converted by the end of the year. The company plans to accelerate conversions from three per week to four per week.

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“A great amount has been achieved in the last few months which have illustrated what a good business Morrisons is and has convinced me of what a good deal the purchase of the Safeway business will prove to be. The integration process has been completed and it is now a pure conversion programme. I am delighted to announce that we will be increasing the rate of the conversion programme which we now largely expect to be completed by the end of 2005,” said chairman Sir Kenneth Morrison.


The company said that in the first ten weeks of the second half, like-for-like sales at core Morrisons stores are up 7.5%, or 4.6% excluding petrol. Like-for-like sales at unconverted Safeway stores were down 7.9%, or 10.1% excluding petrol, but like-for-like sales at converted Safeway stores rose 13.0%, or 12.5% excluding petrol.