Response to the following problem:
Blaming the system When Sir Ken Morrison bought Safeway for £3.35bn in March 2004, he almost doubled the size of his supermarket chain overnight and went from being a regional operator to a national force. His plan was simple enough. He had to sell off some Safeway stores - Morrison has to date sold off 184 stores for an estimated £1.3bn - and convert the remaining 230 Safeway stores into Morrison's. Sir Ken has about another 50 to sell. But, nearly 15 months on, and the integration process is proving harder in practice than it looked on paper. Morrison, once known for its robust performance, has issued four profit warnings in the past 10 months. Each time the retailer has blamed Safeway. Last July, it was because of a faster-than-expected sales decline in Safeway stores. In March - there were two warnings that month - it was the fault of Safeway's accounting systems, which left Morrison with lower supplier incomes. This month's warning was put down to higher-thanexpected costs from running parallel store systems. At the time of the first warning last July, Simon Procter, of the stockbrokers Charles Stanley, noted that the news ‘has blown all profit forecasts out of the water and visibility is very poor from here on out'. But if it was difficult then to predict where Morrison's profits were heading, it is impossible now. Morrison itself cannot give guidance. ‘No one envisaged this,' says Mr Procter. ‘When I made that comment about visibility last July, I was thinking on a 12-month time frame, not a two-year one.' Morrison says the complexity of the Safeway deal has put a ‘significant strain' on its ability to cope with managing internal accounts. ‘This is impacting the ability of the board to forecast likely trends in profitability and the directors are therefore not currently in a position to provide reliable guidance on the level of profitability as a whole,' admits the retailer.