Morrison poised 'to bank £600m'

SUPERMARKETS group Morrison is expected to announce this week that it will sell 120 small Safeway stores to Somerfield.

The sale, expected to be worth up to £600m and to be partly financed by a sale-and-leaseback deal at Somerfield, will mean that Morrison has recouped about £1bn from its £3bn acquisition of Safeway in March.

It has already raised £500m from selling 52 Safeway stores to rivals including Waitrose and Asda.

Latest figures from retail research group TNS show that Morrison is losing market share, which observers blame on the fallout from Safeway stores that have yet to be converted into the Morrison format.

Progress in converting the Safeway outlets is the key factor for Morrison when it announces its first-half results this week, analysts said.

Morrison warned at the start of July that weak sales at its Safeway chain would hit earnings and said pre-tax profits for the 25 weeks to 25 July, covering its first half, were expected to come in at £120m-£125m.