The UK’s fourth largest supermarket Morrisons is set to get even bigger after announcing grand plans for the next 12 months, including the expansion of its online operation.
Preliminary results for the year ending January 30th show that like-for-like sales at the Bradford-based retailer grew 0.9 per cent year-on-year and turnover was up seven per cent to £16.5 billion, but more growth is expected thanks to a number of new initiatives.
Morrisons revealed today that it has acquired a ten per cent share of US grocer FreshDirect for a price of £32 million as a prelude to launching its own internet food service in the UK.
Under the terms of the agreement Morrisons CEO Dalton Philips will become a member of the FreshDirect board, while the UK firm will employ a team in its US partner’s New York facility to boost its knowledge of e-commerce operations.
Following this year’s acquisition of online baby products retailer Kiddicare, the move signals a step change in Morrisons multichannel offering.
Sir Ian Gibson, Non-Executive Chairman of the grocer, said: “This has been another good year for Morrisons.
“We have ambitious plans to take Morrisons unique offer to more customers through our accelerating new store programme and through the development of new channels.”
Meanwhile underlying profit-before-tax for the year was up 13 per cent to £869 million, while net debt stood at £817 million.
Some 15 new stores opened during the 12 months too and the company has agreed to acquire 16 Netto stores, subject to Office of Fair Trading approval.
Last year Morrisons identified sites where it could trial convenience stores - and the roll out of these outlets, alongside multichannel growth, is set to be a key theme for 2011.
CEO of the business Dalton Philips said: “Our plan to make Morrisons ‘Different and Better than Ever’ has great momentum, with store trials underway that are yielding exciting results, our first convenience store sites secured and important e-commerce investments in FreshDirect and kiddicare.com announced.”
So with huge changes on the horizon, Morrisons will need to take a long-term approach in order to ensure it is successful in its new endeavours.
Matt Piner, Senior Analyst at Verdict Research, commented: “Online grocery, convenience stores, non-food and own label ranges all present excellent opportunities if it can get them right, but they are all fiercely contested areas that will leave little room for error.”