Buyers queue for Safeway stores

BID-TARGET Safeway said it is confident it will raise more than expected for the parcel of stores it has put up for auction, after 'very encouraging' responses from potential buyers.

The stores, which were put on the market to enable the Morrison bid to go ahead, have been valued at £543m, but Safeway said today it has received indicative offers for 39 of the outlets at a value 'comfortably in excess' of their aggregate valuation.

In addition, there has been 'considerable interest' in the other 13 stores, which had been valued at £31m.

News of the sale progress came as Safeway reported a fall in interim profits from £187m to £173m, in line with its earlier forecast.

Chief executive Carlos Criado-Perez said trading remained stable, despite the distractions of the bid, adding: 'We intend to build on our excellent Christmas trading performance-last year, with an even stronger set of offers, great new products especially from our Best range and the growing strength of our non-foods.

'Our seasonal lines are already selling well and I'm confident we can continue the solid performance we delivered in the first half.'

Safeway chairman David Webster said he hoped the regulatory issues holding up the renewed bid from Wm Morrison will be settled shortly.

Analysts expect Morrison to add a cash 'sweetener' to its original £2.9bn terms and expect the new offer to be launched within the next few weeks.

Latest market share figures from TNS show Morrisons is continuing to increase its market share, which rose to 6.4% in the 12 weeks to 9 November, up from 6% the previous year.

Sainsbury's, which yesterday poached Marks & Spencer man Justin King to be its new chief executive, saw its share slide from 17.4% to 16%.

Safeway's market share was down from 9.9% to 9.2% over the year, although it has remained stable in recent weeks.

Tesco's share is 26.8%, followed by Wal-Mart-owned Asda with 16.7%.