Profits drop at Morrisons as inflation takes its toll

Bradford-headquartered supermarket chain, Morrisons, saw its profits fall by nearly half in the third quarter due to “unprecedented” inflationary pressure.

The business, which has recently been overhauled by Aldi as the UK’s number four supermarket by market share, reported a fall in its underlying earnings to £177m in the 13 weeks to July 31, from £356mn in the same period last year.

Group revenue for the quarter was up 4.5% from £4.58bn last year to £4.79bn.

Chief executive, David Potts, responded: “It’s clear that the cost of living crisis is starting to change customer shopping patterns in many ways.

“The speed, scale and severity of cost and energy price increases, exacerbated by the terrible war in Ukraine, had significant impacts through the quarter, but the market is still growing and the [Government’s] energy price guarantee will ease pressure on consumers.

“We are doing everything we can to keep prices down for customers.”

Morrisons added the quarter finished strongly and has forecast that this momentum should continue during the final three months of the year.

It also said some of the decline was a result of “temporary and transitional factors”, including alterations to the group’s loyalty scheme.

Same-store sales fell 3.1% excluding fuel but were 4.3% higher when petrol and diesel sales were included, illustrating the effects of elevated fuel costs due to the Ukraine war.