Safeway slows as Asda surges

SAFEWAY has been hit by a slowdown in underlying sales, according to figures today that contrast sharply with booming figures from rival Asda. Unveiling an 11% rise in annual pre-tax profits to £355m, Safeway revealed that like-for-like sales grew by only 2% in the first six weeks of the new financial year.

Chairman David Webster played down the slip, which compares with like-for-like growth in the whole of the previous year of 4.8%. 'It's only the first six weeks,' he said. 'We were up against tough comparatives. We expect an improvement in the rest of the first quarter.'

The store reformatting programme, with its greater emphasis on fresh produce, is delivering a 10% sales boost in converted shops, but was disrupting trade. Safeway is confident of a strong lift in sales from the launch of three megastores in the next few months including a vast Glasgow emporium, which is opening today.

On Tuesday night Wal-Mart, the US owner of Asda, boasted that its British offshoot had had 'a very strong quarter with sales and operating profits well ahead of plan'.

'Even better, we think the sales growth was driven predominantly from new customers,' said Wal-Mart spokesman Tom Williams. Asda sales prospered in all the main categories, he said, with food sales rising in high single digits, twice the level of market growth. Clothing sales were up by more than 30%, and general merchandise, excluding apparel, increased by about 25%.