Shares in Morrisons have leapt 12 per cent after the supermarket chain revealed impressive sales figures for former Safeway stores now rebranded under its own name.
Morrisons took over Safeway in March, and sales at the stortes it has revamped in the interim period are up 13 per cent year-on-year.
Underperformance across the remaining Safeway operation reduced Morrisons half-year profits by 7.6 per cent to £121.6 million.
But Morrisons has responded by bringing forward its timelines on the conversion process, with particular emphasis on the worst performing stores. The Safeway brand name should now completely disappear by the end of 2005.
The company's original Morrisons stores saw both sales and profits rise, whereas Safeway outlets overall made a £39m loss with sales down 7.9 per cent.
Morrisons candidly admitted that the integration of Safeway into its fold has been "difficult". The cultures of the two companies, added a statement, "had little in common".
"There were many operational differences in the way the two companies were organised," it said.
"Morrisons is a sales-driven business with careful control of expenditure and with a strong, clearly defined, management structure."
The decision of Safeway’s previous directors to introduce a completely new accounting system four weeks prior to the takeover came in for fierce criticism. Morrisons said: "Insufficient training had been undertaken and the system had not been thoroughly proven prior to its introduction. The problems took time to solve but the situation is now under control."
Morrisons chairman Sir Ken Morrison said that now the integration process is over, his confidence in the long-term prospects remains undimmed.
"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," he said.
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