Morrisons shares soar as supermarket stocks push FTSE 100 to record high
CITY analysts have rallied behind the turnaround of Morrisons after the group’s share price soared yesterday and contributed to the FTSE 100 hitting an all time high.
Following the retailer’s announcement that it enjoyed its best Christmas trading period for seven years, the supermarket stormed ahead of City predictions, prompting its shares to rise by 9p to 246.5p in mid-morning trading before closing at 246p, up 3.62%, giving a market capitalisation of £5.72bn.
UK supermarket stocks, buoyed Morrisons’ strong festive sales, boosted the FTSE 100 to a new all-time high.
The blue-chip index, made up of the UK’s largest 100 companies, rose to 7,266 by noon and continued to climb throughout the afternoon to 7,277.
Morrisons share price has risen 77% since December 2015:
A year ago, and nearly a year into Mr Potts’ leadership, retail analysts maintained a gloomy outlook for the group, believing it was, at the time, the most fragile of the Big Four supermarkets. Analysts have only recently started to change their tune, as early signs that Mr Potts’s changes had steadied the ship begin to have a much bigger impact than they had expected.
At the time, John Ibbotson of the retail consultants Retail Vision, said: “Sticking to the core proposition of big superstores mainly in the north of England without a convenience or expanded non-food internet offer gives [chief executive David] Potts few options for returning to growth.”
However, yesterday’s results showed that the group’s long journey to revival was gaining momentum, leading Phil Dorrell, Partner, Retail Remedy retail consultants to call the group’s like-for-like sales growth over Christmas “quite remarkable” and that Mr Potts had “turned this ship around and whilst navigating a big tanker like this takes time his grip on the tiller is both clear and strong.”
A determination to turn the fortunes of Morrisons around has paid off for Mr Potts.
On joining the business two years ago, he showed confidence in his plans to guide the grocer back to health, spending £1.05m in his first week, buying 508,000 shares at 205.85p. That September, he went share shopping again, buying £500,000 worth and doubling his personal shareholding to £1.3m.
Last April, he threw his weight behind turnaround plans for the business once again, investing £360,000 at 201p per share.