MORRISONS is to close 11 supermarkets as its new management team sharpens the retailer’s focus in order to turn around the supermarket group.
Its half-year figures announced today showed, as expected, a tough period for sales, albeit one that showed signs of improvement.
David Potts said “the immediate priority is to deliver a better shopping trip” and said that customers and staff were already noticing improvements.
That has required “tough decisions” and the announcement of more closures highlights there is much more still to be done.
He said: “It is with regret today that we have taken the very tough decision to close, or consult on the closure of 11 of our supermarkets. There are up to 900 of our own staff involved in that decision. We will hope to employ those staff in nearby stores or in distribution.”
The Bradford-based supermarket group had been the worst affected of the big four from the rise of the discount retailers led by Aldi and Lidl, and its share price halved over a 13-month period to last October as the group got trapped in a malaise that was increasingly of its own making.
The transformation is being spearheaded by chairman Andrew Higginson and chief executive David Potts, both former Tesco executives who began their roles in January and March respectively.
Andrew Higginson, whose appointment as chairman was the trigger for the departure of former chief executive Dalton Philips after Christmas, said: “David has very quickly formed a new team that combines the best of Morrisons home grown and external talent.
“During the first half, the team has made good progress in starting the turnaround journey. Whilst the management team need time to settle in, make the changes they see as important, and build trading momentum, I believe the team will deliver much improved profits and returns for shareholders.”
Sales were down 5.1% to £8.1bn in the half-year to August 2, although life-for-like non-fuel sales were down 2.7% – part of the difference being the falling price of oil which contributed to fuel sales dropping 17% to £1.6bn.
Morrisons’ like-for-like performance in the second quarter of -2.4% showed that the rate of decline has slowed significantly from -7.6% a year earlier.
Overall, pre-tax profits were down 47% to £126m while impairment and provision for onerous contracts were put at £87m.
The turnaround project has launched attacks on several fronts – the senior management team has been almost entirely replaced, 720 head office roles are being cut while 5,000 jobs are being created in stores, its convenience stores have been sold, while the brand is also being repositioned, with Ant and Dec replaced on its advertising and the unpopular misting machines – which came to symbolise how the retailer had lost its way – done away with.
Mr Potts said: “During the first half, the new executive and leadership teams have been listening hard to colleagues, customers, suppliers and shareholders. They tell us there is a lot for us to do.
“The immediate priority is to deliver a better shopping trip to stabilise trading
performance. Our six strategic priorities will then deliver improvement in the core supermarkets, where we have the greatest opportunity.
“It will be a long journey. We approach the challenge with energy, confidence and
many strengths, particularly our strong balance sheet and cash flow, which enables investment in improving the customer shopping trip.”
There is a belief that the turnaround can succeed, and Morrisons confirmed that while the interim dividend of 1.5p is much lower than last year, the full-year dividend will be “not less than 5p”.
