Morrisons in £223m deal for Co-op stores

SUPERMARKET group Morrisons has announced the £223m acquisition of 38 stores from the Co-op as it revealed a “solid” 8% growth in sales over the last three months.

The 8.1% rise in like-for-like sales in the 13 weeks to November 2 puts Morrisons well ahead of market leader Tesco which had a sales rise of just 2% over a similar period.

Chief executive Marc Bolland said that the Bradford-based chain had attracted more than 700,000 new customers to its stores and had agreed a deal with the Co-operative following its takeover of Somerfield for 38 Co-operative Food and former Somerfield stores for £223.1m.

He said the new stores would fit within its existing portfolio of 150 smaller stores and add more than 500,000 sq ft of additional selling space.

Morrisons will spend another £98m to refurbish and integrate the stores into its chain and said that it will put its £1bn share buy-back programme on hold this year to pay for the acquisition and the £82m cost of its new distribution centre in Sittingbourne, Kent.

Mr Bolland, said: “In this challenging economic environment more customers than ever before are choosing Morrisons. The group has delivered strong sales growth in Q3, building on the momentum reported in the first half, whilst continuing to invest in the customer offer. Against a tough economic backdrop, performance has been in line with our expectations.”

In the 13 weeks to November 2 total sales excluding fuel were up by 9.5% (14.9% including fuel) of which 1.4% was a contribution from new space.

It said its “sustained leadership” in reducing petrol prices plus its “Price Crunch” deals had helped attract shoppers.

Mr Bolland added: “The economic environment is difficult and will remain challenging, but we have confidence in the strength of our value proposition. Performance in the third quarter has been solid and our financial expectations for the current year remain unchanged.”

Rothschild advised Morrisons on the deal.