Morrisons hails progress but sales continue to fall
MORRISONS has reported another big fall in sales but the supermarket’s chief executive Dalton Philips said the group is “meeting the challenges created by a period of intense industry competition.”
For the 13 weeks to November, total sales excluding fuel at the Bradford-headquartered group were down by 3.6% (down 5.6% including fuel), and like-for-like (LFL) sales were down 6.3% (8.0% including fuel).
Online contributed 0.7% to LFL during the period.
However, the group said it remained confident in its full year 2014-15 profit outlook.
The group is hoping to generate £2bn of cash and £1bn of cost savings over three years, and now expects underlying profit before tax to be in the narrower range £335m-£365m (previously £325m-£375m), after £65m of new business development costs and £70m of one-off costs.
Morrisons said: “As outlined at the interim results, it will take time for our initiatives to fully benefit our sales performance. In the meantime, we continue to see encouraging progress in all components of our strategy and in our volume-related key performance indicators (KPIs).
“We continue to substantially increase our investment in the Morrisons proposition. Alongside further investment in price during the period, we launched Match & More, our new price match and points card which provides a unique price guarantee against Aldi and Lidl as well as Tesco, Sainsbury’s and Asda. The card is already proving extremely popular with customers.”
Morrisons said an improving IT platform is enabling the grocer to better understand and serve customers, and drive cost out of the business.
“Also, all major in-store cost initiatives – such as restructuring teams to make them more effective, up-streaming some of the invisible manufacturing, and simplifying the range – saw significant progress during the quarter,” it said.
During the period, Morrisons exchanged contracts to re-assign eight of the ten former Kiddicare leasehold sites and expects completion in the coming weeks.
The group opened 12 new M local stores and three new core stores plus one replacement in the period and said it is on schedule to meet its target of opening 60-70 new M local stores by the year end.
Morrisons said the financial position of the group remains strong, with net debt of £2.6bn.
“Progress on debt reduction is particularly encouraging, and we now expect year-end net debt to be £2.3bn-£2.4bn, £100m better than initially guided and £400m-£500m lower year-on-year,” it said.
Dalton Philips, chief executive, said: “Morrisons is meeting the challenges created by a period of intense industry competition and structural change with quick and decisive action. I am encouraged by the further progress we have made, especially on a number of key operational measures, cash flow and costs.
“The launch of the Match & More card was another big move for Morrisons. We are the only supermarket that is price matching the discounters and the successful launch last month was a testament to the positive way our 120,000 colleagues are delivering innovation and embracing the changes at Morrisons.
“We look forward to the key Christmas period focussed on offering customers the best in quality fresh food and value for money that Morrisons is famous for.”
It is hoping to take on discount rivals Aldi and Lidl and if successful, the next stage of the joint venture will see the new format rolled out across the country.
The move marks a return to the UK for Netto, which sold its 193 stores to Asda for £778m in 2010.
