Morrisons looking to cut £700m in costs, but CEO hails trajectory
The CEO of Bradford-headquartered supermarket chain Morrisons has hailed the company’s “improving trajectory” – but says £700m of cost savings will have to be made to keep it moving in the right direction.
Despite being acquired by US private equity firm Clayton, Dubilier & Rice for £7bn last year, the company has endured a troubled period of late. Its Group like-for-like sales excluding fuel fell by 4.2% in 2021/22 – a slump it attributed to uncertainty in consumer sentiment brought on by high food price inflation, rising interest rates and the war in Ukraine.
However, improved sales momentum towards the end of 2022 appears to have translated into a more positive performance – if only marginally. The company saw its revenue increase by 3.4% to £4,713m in Q1 2023 and says it has stablished its market share.
Its like-for-like sales were up 0.1% during the quarter.
More worryingly, Morrisons said it had recently launched a £700m cost savings programme to enable “further investment in lowering prices, increasing service levels, investing in loyalty and expanding [its] convenience footprint.”
Morrisons CEO David Potts said: “We still have plenty of work to do, but momentum in the business is now building with an improving trajectory over the last three quarters and like-for-like sales now in positive territory. Our market share has stabilised, our inflation rate is below our peers, and Morrisons traditional competitiveness, colour and dynamism is steadily returning to every part of the business.”
The cost cutting programme will “help drive the performance of the business by enabling further investment in our loyalty programme, increasing the pace of McColl’s conversions, putting more hours into our stores, as well as mitigating the significant cost headwinds that we face”, he added.