Morrisons results see slight improvement

UK retailer Morrisons appears to have turned a corner, but acknowledges it will be a long journey to completely turn around the business.

morrisonsThe supermarket reported like for like sales (excluding fuel) up in the fourth quarter, buoyed by a positive online contribution of 1%, but these fell 2% overall in the 12 months to 31 January 2016.

Total turnover over the year also fell 4.1% to £16.1bn, compared to £16.8bn last year, but reported profit before tax was slightly ahead of expectation, at £217m, compared to last year’s whopping £792m loss.

It is the first results since the retailer surprised the City by announcing it was moving into wholesaling with a tie-in with online giant Amazon – and the preliminary results also talking about franchising its convenience store pilots with Motor Fuel Group as part of the “broader opportunities” open to the business.

“The turnaround will take time and will continue to require sustained investment in the proposition,” chief executive David Potts said. He argued that the three-phase strategy had got off to a good start as it focused on cost, improving like-for-likes and boosting availability, noting more frequent deliveries across Beers, Wines and Spirits.

Analyst Clive Black of Shore Capital said ten months into the reign of Potts, Morrisons was “in much safer hands” following a period of “sustained turmoil” and decline. The result, he added was “a more competitive business with a stronger financial constitution and a brighter future” and pointed to the improving trend in like-for-likes across the year, and deflation of >3%, which he said implied volume growth of “around 3%”.

“Morrison has the constitution not just to withstand any deeper commercial frosts but also to go on the front-foot and so to undertake the necessary work to enhance the business’ performance,” he said.

On Tuesday, Kantar Worldpanel reported the multiple retailers had witnessed the fastest growth in five months, up 0.5% in the 12 weeks to 28 February 2016, compared with the same period the previous year. It noted strong sales of sparkling wine sales, up 15%, boosted by Valentine’s Day and the run-up to an early Easter.

It noted that the decline in store numbers over the last year  – there are 20 fewer than this time last year – only had cost Morrisons sales, down 3.2% with its market share dipping to 10.6%, but online sales were growing strongly. “It is a trend set to continue in the coming months as the retailer converts more existing in-store shoppers to its e-commerce channel, Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, said. “Despite being a relative latecomer to online grocery, Morrisons’ forthcoming tie-up with Amazon could provide another boost to the business.”

Last summer, the retailer spent nearly £10m remerchandising its BWS aisle across its entire estate, returning to colour-blocking by country and away from the innovative segmentation by style based on a Taste Test. It also lowered the price of the majority of its entry-level ‘chalkboard’ own label range to £4 and extended its number of craft beers and premium spirits.

Leave a Reply

Your email address will not be published. Required fields are marked *

Please note that comments are subject to our posting guidelines in accordance with the Defamation Act 2013. Posts containing swear words, discrimination, offensive language and libellous or defamatory comments will not be approved.

We encourage debate in the comments section and always welcome feedback, but if you spot something you don't think is right, we ask that you leave an accurate email address so we can get back to you if we need to.

Subscribe to our newsletters

Global Chardonnay Masters 2019

Deadline : 25th November 2019

The Global Riesling Masters 2019

Deadline : 2nd December 2019

Click to view more

Rioja Masters 2019

View Results

The Global Sparkling Masters 2019

View Results

Click to view more