Supermarket chain Morrisons has seen its profits and sales increase over the last year after heavy investment in stores and branding, it was revealed today.
Underlying profit before tax for the group grew eight per cent to £935 million in the 12 months ending January 29th 2012, while like-for-like sales improving 1.8 per cent year-on-year.
Total dividend for the year rose 11 per cent to 10.7p per share, the group managed to retire £368 million of equity, and its net debt now stands at £1.47 billion after capital investment of £901 million.
Enhancing its multichannel & non-food offering has been a major focus for the group, and the retailer now says the future of general merchandise sales is in “clicks not bricks”
During the year its convenience store format was launched in three locations and it acquired baby products e-tailer Kiddicare. Now it plans to launch a fully transactional online service, Morrisons.com, by the end of this year.
Dalton Philips, CEO of Morrisons, said: “This has been Morrisons best year yet with another good financial performance and growth ahead of the market.
“We know that 2012 will be tough, and we will be working hard to deliver even better value for our customers. At the same time, we have ambitious plans for the long term development of the business, through new supermarkets, convenience stores and the development of our multi-channel capabilities.”
Morrisons opened 34 new supermarkets last year, including 19 ex-Netto outlets purchased from Asda, and the group intends to expand its portfolio further in 2012 particularly in its M local convenience format.
The last year also has also seen the introduction of the M Kitchen fresh food proposition and its M savers value range of products, and the group intends to pursue a range of new opportunities in the new year while delivering profitable growth.
While impressed with Morrisons attempts to improve its customer offer with these innovations, market analyst Clive Black of Shore Capital is concerned that focus on these areas may alienate bargain hunters without securing enough of the premium market.
Trading decelerated in the fourth quarter for the group, just at the time when market leader Tesco was suffering and onlookers would have expected rivals such as Morrisons to pick up customers from the industry giant.
“Morrison does not appear to have ‘made hay whilst the sun shone‘ and if Tesco UK improves its competitiveness it may prove more than challenging to ‘make hat when the sun does not shine‘,” Black commented.
“The proof of the pudding will be in the eating and so we need to see how the store modernisation plan pans out.
“Somewhat downbeat unfortunately, we have to say that we worry that Morrison has lost share so soon after the full incorporation of its ‘M-Kitchen‘ range, a range that we feel has much going for it but does involve materially higher price points and scope for materially greater wastage.”