Morrisons hails resilient response to the pandemic
Total revenues at Bradford-headquartered supermarket chain Morrisons are down 1.1% to £8.73bn (2019/20: £8.83bn), after being significantly impacted by very low demand for fuel during and after lockdown.
Morrisons has today published its interim results for the half year to 2 August 2020. Total revenues at the company, excluding-fuel, are up 8.8% to £7.55bn (2019/20: £6.93bn).
Group like-for-like (LFL) sales excluding-fuel/excluding-VAT are up 8.7% (2019/20: up 0.2%). Quarter two Group LFL ex-fuel/ex-VAT are up 12.3% (Q2 2019/20: down 1.9%), including a very strong retail contribution to LFL of 11.1% (Q2 2019/20: down 2.4%).
Profit before tax and exceptionals was down 25.3% to £148m (2019/20: £198m).
Morrisons says its profits were temporarily impacted by the considerable costs of COVID-19, especially extra payroll, bonus, colleague and customer safety protection measures, distribution costs, and seasonal waste and markdown, plus various initiatives for food banks, charities and local communities.
In total these extra costs amounted to £155m for the business during the first half.
However, Morrisons adds this was partly mitigated by four months of business rates relief of £93m, meaning a net first half COVID-19 cost impact of £62m.
Over the same period, online and home delivery order capacity was up fivefold, with five new growth channels: Morrisons.com store pick, food boxes, doorstep, ‘Morrisons on Amazon’ and Deliveroo.
The chain also recruited over 45,000 new and temporary members of staff during the pandemic.
Responding to the results this morning, David Potts, chief executive, said: “From the start of the pandemic we stepped up and put the company’s assets at the disposal of the country to help feed the nation.
“Morrisons is at the heart of local communities and responded quickly when it mattered most, and we are very grateful for the British public’s appreciation of all the vital work our colleagues are doing. I believe we are seeing the renaissance of British supermarkets.
“We are now looking forward to holding on to what we created in the first half, building on our colleagues’ inspiration and innovation, and sustaining the momentum of a broader, stronger Morrisons.”
Andrew Higginson, chairman, said: “I am so proud of all our colleagues, including our leadership team, for the contribution they are making during the COVID-19 crisis.
“From the first days of the virus and lockdown our teams have continued to turn in for work and serve our customers, whatever their own personal concerns.
“It is a tremendous effort, and Morrisons has played a leading role in keeping the nation’s food supply open.
“In so doing, we have been able to help customers, colleagues, local communities and other key stakeholders such as the NHS, smaller suppliers, British farmers and charities.”
In its Outlook statement, Morrisons notes: “Despite the unprecedented crisis and many challenges of the first half, our business responded very well and our trading performance was strong.
“We are confident of continued strong momentum into the second half, improved free cash flow and net debt, and another year of growth in profit before tax and exceptionals.”
It warned: “Many of the payroll, bonus, seasonal waste and markdown, distribution, community, and colleague and customer protection initiatives come at considerable cost.
“For example, at times we have been experiencing temporary absence rates running at up to 20,000 colleagues.”
In June, logistics company Wincanton announced it had extended its relationship with Morrisons.
Morrisons awarded Wincanton the management of its transport and Vehicle Maintenance Unit (VMU) operations at Willow Green, Bridgwater.
The supermarket chain and Wincanton also agreed to partner to improve logistics activities and service to Morrisons stores.