Safeway's festive sales falter

SAFEWAY, which is in the throes of a recovery programme, disappointed City brokers as it reported underlying sales growth of 4.1% for the 12 weeks to 5 January.

The firm, led by chief executive Carlos Criado Perez, said that like Tesco it suffered from a big drop in petrol prices. This, combined with price cuts in its stores resulted in volume growth of 5.4% against 4.3% in the second quarter.

Britain's fourth-largest supermarkets chain said its performance reflected continued growth in customer numbers together with an increasing average spend from existing shoppers.

It is optimistic about the future as it continues to refit stores. Safeway said it has passed the period of maximum disruption from refitting so the benefits of increased sales should begin to outweigh the disruption caused by in-store work.

Safeway opened its first 'megastore' last month to complement its three other formats - superstores, supermarkets and convenience stores.

The shares held at 307p.