Morrisons raises profit target as turnaround gathers pace

MORRISONS was in bullish mood this morning after reporting an increase in sales over the Christmas trading period, its strongest performance in seven years.

It now expects its full-year underlying profit before tax to be ahead of the market consensus, in the range £330m-£340m.

David Potts, chief executive, said: “This Christmas we made further improvements to the customer shopping trip. We stocked more of what our customers wanted to buy, more tills were open more often, and product availability improved as over half of sales went through our new ordering system. Both like-for-like and total sales grew, which was very encouraging.

“Eighteen months ago I said that this would be a colleague-led turnaround, and our improving performance is entirely due to the continuing hard work of the Morrisons team of food makers and shopkeepers. I would like to thank all colleagues for making Christmas and New Year extra special for our customers.”

In the nine weeks to January 1, like-for-like sales excluding fuel were up 2.9% (up 4.7% including fuel).

Total sales were also up, 2.0% excluding fuel, or 4.0% including fuel, despite the “continuing impact of store closures.”

Like-for-like transaction growth was again strong, up 5.2% year-on-year during the period.

The grocer said it expects 2016/17 year-end net debt to be around £1.2bn.

It said: “We continue to serve our customers better both in the stores and online. Service standards improved at the checkouts and on the shop floor, and achieved its biggest ever week for sales.

“Our new ‘Best’ range is already proving very popular, with over half of customer baskets including at least one ‘Best’ item. We launched over 100 new ‘Best’ products especially for Christmas shoppers in addition to the first 470 which were launched in the Autumn. Customer feedback on quality and breadth of the range has been excellent, and we see further significant potential for ‘Best’.”

The company said that in recent months, a new automated ordering system has been introduced into all stores in grocery and many fresh categories, the first of its kind for Morrisons.

“The system is capital light, utilising cloud technology and store-specific historic sales data to forecast stock requirements. It is simpler and saves time for colleagues, availability has improved significantly, and stock levels are down,” Morrisons said.