Retailer may make disposals to have more coherent estate
Morrisons has indicated to the City that more Safeway stores may be sold off in order to create a more coherent estate. The grocer has already disposed of 167 stores since its acquisition of Safeway. Morrisons has now told analysts it expects to have a chain of 390 stores by 2007, meaning that more disposals are likely.

In a note, Citigroup Smith Barney analyst James Anstead said: 'Given that Morrisons will have 440 stores following the completion of the OFT and Somerfield disposals, and that we expect about 15 new store openings between now and then, this implies that there are around 65 stores in a grey area.

'Martin Ackroyd [Morrisons finance director] has stated that he believes there will be a 'seamless' business by January 2007, so it seems difficult to imagine that Morrisons will still be running 65 unconverted Safeway stores.'

Deutsche Bank noted that Morrisons could sell some stores measuring between 15,000 sq ft and 25,000 sq ft (2,320 sq m and 1,395 sq m) that may not fit its preferred larger-store model, as well as outlets that do not fit from a supply chain or demographic perspective.

A Morrisons spokeswoman confirmed the grocer is evaluating whether to keep or dispose of a number of stores. She added that Morrisons is also looking at store extension possibilities.