Profits up for the first time in four years at Morrisons
MORRISONS has reported that first half profits were up for the first time in four years.
Underlying profit before tax was up 34.2% from the first half of the 2015/16 year, to £157m.
Unlike its Yorkshire rival Asda, which reported its seventh consecutive quarter of sales decline last month, the Bradford-based supermarket saw its third consecutive positive quarter.
Like-for-like sales excluding fuel were up 2.0%.
Revenues dipped slightly, down 0.4% to £8.03bn from £8.06bn last year.
Chief executive David Potts has been enacting turnaround plans with the “Fix, Rebuild and Grow Morrisons” mantra.
The prices of more than 4,000 products have been cut this year, renegotiated its expensive Ocado deal and focused on its ‘Market Street’ offering of fresh food from fishmongers, butchers and deli counters on site.
Earlier this week the company announced it would be installing 1,000 Amazon lockers throughout the UK to help customers pick up deliveries
Having seen no “negative impact” on shoppers’ behaviour following the Brexit decision, the supermarket said it expects to exceed its £1bn three-year cost savings target by the end of 2016/17.
It will be focusing product ordering, distribution and in-store administration to increase productivity it said.
David Potts, chief executive, said: “We are pleased with positive like-for-like sales and 11% underlying profit growth in the first half. Our priorities are unchanged. We have made improvements to the shopping trip for customers and we plan to do more.
“I would like to thank the entire Morrisons team of food makers and shopkeepers who are working very hard to Fix, Rebuild and Grow Morrisons. This turnaround opportunity is in our own hands and I am confident we will succeed.”
John Ibbotson, director of the retail consultancy Retail Vision, said that Morrisons had “stopped the rot and started making a profit, in a turnaround that looks more impressive by the day.”
He said: “The rise in like-for-like sales is modest, but three straight quarters of growth suggests it’s a genuine boost rather than a blip.
“The brand’s current campaign is entitled ‘Morrisons Makes It’, and on this evidence it might just make it after all.
“CEO David Potts’ back to retail basics approach – in which stores have been spruced up, with more local ranges and lower prices – is beginning to pay dividends and tempt shoppers back.
“Meanwhile a faster supply chain – which allows stores to keep more products in stock – is raising efficiency. Potts’ ruthless decision to close 30 stores and sell Morrisons’ underperforming convenience chain has staunched the losses.
“His renegotiation of the expensive Ocado tie-up, and the new supply deal with Amazon could turn out to be nothing less than inspired.
“The beleaguered retailer is finally heading in the right direction, but there is still a long way to go. As the smallest of the Big Four, Morrisons will be sorely tested by the looming price war with the sector’s deep-pocketed behemoths.”
