Saturday, April 4, 2020

Morrisons upbeat on prospects despite profit slide


Morrisons have posted disappointing figures for the first half of 2013 as it seeks to grow its multi-channel offering across the UK.

Like-for-like store sales are down 1.6 per cent compared to the same period last year (0.9 per cent) yet Sir Ian Gibson, Non-Executive Chairman remained confident in Morrisons ability to generate return for shareholders. “Our financial position is strong and we remain focused on maximising returns from our assets and delivering superior shareholder returns. Once again our interim dividend is increased by 10 per cent, in line with our previous commitment,” he said.

The supermarket, which has launched 2,800 own brand products so far this year, aims to improve its accessibility by opening a further 67 M local convenience stores across the UK by the end of the year. The shift into the convenience sector is likely to see its high percentage of freehold estate (90 per cent) – which is far greater than rivals –decrease as a result.

It has also signed a deal with online retailer Ocado to launch an online service by January 2014.

Bryan Roberts, Director, Retail Insights, Kantar Retail, said: “As expected, Morrisons‘ profits have declined on the back of market share erosion and substantial investments, although we can take solace from the fact that the retailer‘s like-for-like sales contraction appears to have stabilized. As ever, it is worth remembering that Morrisons still outperforms a number of peers in terms of margins.

“The overdue expansion into convenience is gaining real momentum and we await with interest the company‘s entry into the increasingly crowded and cut-throat online grocery arena. Today‘s results underscore the fact that, if one sets aside convenience, online, store extensions and inflation, the core supermarket industry is finding it virtually impossible to increase like-for-like sales, with only Waitrose and the discounters increasing this metric in a meaningful fashion.”

Morrisons net debt also increased to £2.52bn compared to £1.68bn for the same period last year following investments into an IT system upgrade and a strengthened management team.

Phil Dorrell of retail consultants Retail Remedy commented: “Unless the convenience stores ramp up very quickly, it‘s hard to see beyond a tough second half (for Morrisons). Aldi and Lidl, in particular, are still snapping away at its heels.

“Morrisons continues to play multi-channel catch-up. The talk is of building for the future but for many shareholders it still feels like it is stuck in the past. The £300m upgrade to logistics and systems and tie-up with Ocado are steps in the right direction, and new stores are popping up that have a degree of panache. But many of Morrisons‘ stores still feel very tired and, more importantly, it has the oldest customer demographic in the UK.”

Morrisons predicted that that there will be no significant change to the ‘challenging economic environment in the near future‘ but said that they anticipate an improvement in sales performance for the second half of the year.


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