Safeway reported a dip in underlying sales yesterday but insisted that its first quarter profits were in line with last year despite the distraction of the five-way bid battle for the supermarket group that has been raging since January.
Speaking at the company's annual meeting in central London, Safeway's chairman, David Webster, said the takeover contest had affected the company but that trading had been "resilient".
Like-for-like sales in the first 12 weeks of Safeway's financial year are down by 0.6 per cent on last year. But cost-cutting and a reduction in price promotions, has meant first quarter profits are the same as last year, the company said.
Carlos Criado-Perez, the chief executive, said: "We're holding it together and we continue to believe we can carry on doing so, although obviously it will get harder as time goes on."
Paul Smiddy, a retail analyst at Robert W Baird Securities, said: "Profits being flat shows they are cutting costs where they can, such as in the store re-formatting programme. It's all sensible in the short term but I'm not sure management want to be left holding the baby."
The update on current trading came as some shareholders used Safeway's annual meeting to criticise the company's original decision to recommend the all-share merger with Bradford-based William Morrison, which kick-started the auction.
One elegantly attired female shareholder, said: "You've spent an enormous amount of shareholders' money taking Safeway upmarket with lots of goodies to eat. And then you want to join us with a down-market lot. It's like joining Woolworths with Cartier."
She added: "I hope you've braced yourself for going on your own because I think you could do much better." Another shareholder questioned whether Morrisons had the "financial clout" to pull off a deal.
The company said it had taken steps to stabilise its business in the light of the bid battle. It has increased the redundancy entitlements of more staff at its head office in Hayes, Middlesex, to stop people leaving. Staff turnover has risen at head office but is stable in the stores."
Mr Criado-Perez struck a wistful note at the meeting saying his turnaround programme was likely to be cut short by takeover. "Given more time we would have completed the task and transformed our company," he said. "But I recognise that circumstances are not always within our control."
Mr Webster said the uncertainty over Safeway's future could drag on until the Autumn. Although the Competition Commission, which is reviewing the bids from Morrisons, J Sainsbury, Tesco and Asda, has said it will complete its review by 12 August, Mr Webster said he did not expect the findings to be published until September.
Sir Derek Morris, chairman of the Competition Commission, indicated the investigation was still on track yesterday.
Safeway shares closed a penny higher at 263p.