"A truly awful year for Morrisons" – analysts react to supermarket’s results
ANALYSTS have stuck the boot in to Morrisons’ performance after the supermarket chain unveiled their financial results for the final year of ousted chief executive Dalton Philips’ five-year tenure.
Underlying pre-tax profits halved to £345m, but property impairment charges of £1.27bn resulted in pre-tax losses quadrupling to £792m.
Phil Dorrell, director of retail consultants, Retail Remedy, described it as “a rout, not a reversal”.
He said: “With the most dated stores and weakest business strategy of the old guard grocers, Morrisons has truly been put to the sword by the rise of Aldi and Lidl.
“The brand has haemorrhaged both sales and share to the brash young discounters who took its cheap prices USP, improved it, and then unceremoniously yanked the rug from underneath it. Next to the perky German upstarts it has increasingly looked neither cheap nor cheerful.
“Despite a modest pick up over Christmas, 2014 was a truly awful year for Morrisons – with annual pre-tax losses quadrupling to nearly £800m.”
Mr Dorrell believes the decline is not terminal, with the imminent arrival of David Potts to lead the business offering reasons for optimism.
“The brand’s property portfolio is one of its few ‘get out of jail’ cards – and the £131m profit it made from dumping property assets was a rare bright point in a truly awful set of results.
“The new CEO David Potts, who starts on Monday, has a mountain to climb. He is a well-respected figure, and his pragmatic and detailed approach should challenge both the buying teams and the store teams to re-awaken the spirit of Morrisons, hopefully with a modern twist.
“Despite its multiple problems, Morrisons remains a solid business – or at least it would be if it could get its offer right. It needs an overhaul to convince people it is attractive again.
“The marketing over the last few years has been dire, and has done nothing to change its tired public image. The brand needs to be much bolder if it is to recapture the distinctive market niche that it created and then lost.”
