Outlook: Somerfield

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SOMERFIELD'S shares have collapsed from almost 500p to just 94p in the last 18 months and in normal circumstances, the City wants a scapegoat for that kind of thing. Colin Smith has gone from Safeway and Dino Adriano is living on borrowed time at Sainsbury's. But is there any point in throwing David Simons overboard as chief executive of ?

Whether the big man stays or goes one thing should be made clear. None of the experts in this sector have any real idea how to get out of its present mess. Mr Simons has saddled himself with two store portfolios that have been struggling to woo shoppers for the best part of 20 years. Few consumers would choose to shop at a or a Kwik Save unless they really have to. With the likes of Tesco, Sainsbury's and Asda cutting prices thanks to Wal-Mart's invasion, they now have little reason to bother.

Mr Simons made a mistake with the Kwik Save merger, allowing ego, ambition and the persuasive fee induced charms of Warburg Dillon Read and Phillips & Drew to get the better of him. His financial position is now precarious. With high fixed costs and a declining sales line this company will be loss-making within two years if current trends continue.

An ongoing strategic review may produce plans to re-invent as a home shopping operator or to sell assets. But what are these stores really worth? Would-be buyers for some of the Kwik Saves stores might include the Co-op, Netto or Peacocks, but they now know is a distress seller and will bargain accordingly. is in a terrible position and it was Mr Simons who helped put it there by buying Kwik Save. Even so, it is hard to see that sacking him would help. Those still in the stock have little option but to soldier on and hope for the best.