Morrisons predicts two strong years ahead

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Bradford-headquartered supermarket chain Morrisons is predicting two strong years of growth, as it says its like-for-like (LFL) sales excluding fuel were up 2.7% in quarter one (the 14 weeks to 9 May). 

Its LFL sales including fuel were up 4.7%, with fuel volumes almost back to pre-pandemic levels by the end of the period.

The business highlighted that its online sales rose 113%, aligning with the shift online by many consumers as a result of the Covid-19 crisis.

The supermarket states its customers have embraced both its web presence and Morrisons on Amazon, which it says complement the supermarket offer well.

As a result, Morrisons has said profit before tax and exceptionals is to be higher this year than the £431m the business would have achieved for 2020/21 had it not waived the £230m business rates relief.

It also notes it expects “another year of meaningful profit growth in 2022/23”, stating that during “the pandemic there has been a renaissance of the supermarket in Britain” with customers enjoying cooking at home more.

The firm’s success has also been experienced in wholesale, where LFL sales rose by  over a fifth (21%). The update adds: “We benefitted too from our broader, stronger business with wholesale also adding to our supermarket and online scale.

“Wholesale contribution to Group LFL was 1.1%, equivalent to very strong wholesale LFL of 21%, primarily due to the c.230 extra McColl’s stores that we started to supply in recent weeks.”

The trading update also notes: “With 2021/22 starting in February, lockdown was a feature of the early part of our financial year.

“During quarter one, we incurred a further £27m of direct Covid-19 costs, which is in line with our expectations when we announced profit guidance for the year.”

It explained the costs were the result of both staff absences and the requirement for more marshals while the country remained under strict lockdown.

David Potts, chief executive officer, Morrisons

David Potts, chief executive, said: “We’ve had an encouraging start to the year, with positive like-for-like sales and some good momentum across Morrisons both on a one and two-year view.

“We said back in March that we expected to grow profits and reduce debt in the current year and I’m pleased to be both reiterating that guidance today and looking forward to a year of meaningful profit growth in 2022/23.

“The pandemic is not yet over, but it is in retreat across Britain and there is much to be positive about as something approaching normal life begins to take shape.

“Our forecourts are getting busier, we are seeing encouraging recent signs of a strong rebound of food-to-go, take-away counters and salad bars, and our popular cafés will soon fully reopen.”