There’s pressure on any business then but when you’ve got two businesses that are still separate, it’s going to be really tricky.”Yet for all the concerns, you would be hard pushed to find someone prepared to write off Morrisons. Analysts, however, have not been so fortunate, with not a single site trip so far set up for them.This lack of in-depth dialogue with the City means that while forecasts vary immensely, most are bearish about short-term prospects.Mr Smiddy at Robert W Baird comments: “On the three- to four-year view, it will prove to be a transforming deal, but it could be a rough ride for another 12 months Christmas will be tricky. Last week the chain organised a rare trip for business journalists down to its flagship Milton Keynes store, the first Safeway outlet to convert to a Morrisons fascia. It was why we decided to invest in stores and cut prices,” comments Mr Stott.Under the old regime, Mr Stott says that Safeway store managers were responsible for the bottom line, rather than being allowed to concentrate on running their shops.”You would go into a Safeway store and ask why a light bulb had not been changed.

The answer would be: ‘Because it would affect my profitability.’ I’m exaggerating only slightly.”Now we have trading teams to do the buying, the margins are set and the managers can get on and manage.”Both Mr Stott and Ms Melnyk are confident that despite a tough slog ahead in converting the stores – the programme will continue until November 2006, meaning two years of weak Safeway sales – the first few months of full ownership are not indicative of wider problems.Ms Melnyk has hinted that the figures will be better next month, while Mr Stott has gone on record as saying that the profit warning was just a “short-term blip”.Some investors have been selling out, however, and analyst concerns are not allayed. “We drilled down to store level to find out what customers wanted and maybe in some areas we cut back too much.”Most of the old Safeway stores will now carry 2,000 more product ranges than traditional Morrisons outlets.The group felt it had no choice but to slash prices, however – the main contributing factor to the July profit warning. And while sales and profits remained strong, most in the City where happy to go long with the no-nonsense allusion and accept traditionally poor standards of corporate governance (the first non-executive directors were only appointed this year).Says Richard Hyman, chairman of retail consultancy Verdict: “Historically they have allowed people to think they were a little company from Yorkshire that didn’t know what it was doing. It was uncomplicated and unsophisticated and, through a bit of luck, made a bit of money. But they were actually very, very sharp.”The thing that makes Morrisons stand out is its execution in the stores: in all my 25 years in retailing, I have never been in a Morrisons store that’s not firing on all cylinders.”However, this contradiction will not wash now that it has become the company with a £5.1bn market value.As Mr Smiddy comments: “Prior to the Safeway deal, the story was a simple one of high quality. Joint managing director Marie Melnyk is quick to dismiss the Taylor Nelson Sofres figures, saying they do not take account of the important point that, with stores being converted at the rate of three a week (19 have been changed over so far), Safeway sales are bound to be down on last year.She also concedes that Morrisons was too quick to slash product ranges from the 30,000 Safeway carried to 20,000.

But the deal has transformed that.” The City wants more access to the company, and detailed answers when things go wrong.Yet Morrisons is starting to fight back. If you look at the value of [chairman] Sir Ken Morrison’s investment and how much he has lost, being crude, that’s the price you pay.” Morrisons’ shares have fallen from a high in March of 256p, when it completed the Safeway deal, to a low last month of just 171.25p.The problem is that Morrisons used to get away with it.Led by Sir Ken, the son of the founder, it cultivated a reputation as a no-nonsense Northern retailer, more akin to a family business than a blue chip public company. There’s been an extended blackout.”I would never suggest that we’re owed an explanation, but if the company wants a balanced market in its shares, the market needs more information. And it has yet to make a decision about whether to sell the 120 smaller stores, a sale which would raise about £400m.To top it all, the group’s reputation in the Square Mile is being marred, with management accused of arrogance in their refusal to open meaningful and regular dialogue.One analyst, at one of the world’s biggest and most influential investment banks, complains of poor communication, of requests to meet with management left unanswered and of face-to-face meetings that are few and far between.”The honest answer is that it’s very difficult to assess the performance of the business,” he says.

The bill for converting the 450-strong estate was underestimated: it is now expected to come in at around £375m, around 50 per cent more than was originally expected.And the number of people willing to move from Safeway’s Middlesex headquarters to Morrisons’ Bradford hub was overestimated, meaning the amount of job losses will be higher than expected. Originally, around 1,200 redundancies were predicted from the 1,600-strong HQ, but so far “less than 200 people” have opted to relocate to the North.Joint managing director Bob Stott’s explanation for this to The Independent on Sunday appears ingenuous: “We thought people would have welcomed moving up North. But maybe the pay rates in the South are higher.”"They were naive about the ease with which the businesses could be integrated,” says Paul Smiddy, retail analyst at stockbroker Robert W Baird. Its decision to buy larger rival Safeway prompted a flood of potential buyers to join the fray, from legendary US buyout firm Kolhberg Kravis Roberts to fellow British grocers Tesco and J Sainsbury. Even Top Shop billionaire Philip Green got in on the act at one point.
But Morrisons clung on. The £3bn deal was completed in March and the chain is now focused on converting the newly acquired estate to stores bearing its own name – with the traditionally strong level of sales seen at Morrisons.Yet the task is not proving easy. Safeway is dragging down the previously impregnable Morrisons, forcing a profit warning in July – the first in its 37 years as a public company – and the expectation of yet more bad news at next month’s interim results.One of the reasons is that Morrisons slashed product ranges in Safeway stores, prompting shoppers to take their business elsewhere.