Value the watchword as Morrisons sparkles

SUPERMARKET chain Morrisons has beaten analysts’ forecasts with a 13% rise in annual profits and has also dropped plans to return £500m to shareholders.

The Bradford-based chain said it would invest the money instead.

Profit before tax and one-off items was £636m for the year ended February 1 on turnover up 12% to £14.5bn.

Chief executive Marc Bolland said: “Our focus on fresh food and value appeals to shoppers everywhere and provides a strong platform to take Morrisons from national to nationwide.” 

Mr Bolland said Morrisons’ aim was to be the UK’s “food specialist for everyone”, which differentiated it from its competitors, who he said were keen to expand non-food items.

Morrisons, which serves around 10m customers a week and is the UK’s fourth largest supermarket business, is paying a total dividend for the year up 21% at 5.8p.

The group, which has 382 stores, said its broadening appeal had seen a further 550,000 customers per week shopping at its stores, while nine new stores opened over the year.

Although it said it expected “the competitive landscape to be extremely challenging”, it said its balance sheet was strong and its financing arrangements were “prudent”.

Morrisons said it would exceed its planned 1m sq ft of extra store space by next January by 500,000 sq ft thanks to its acquistion of 38 Co-operative stores which will complete later this year.

It has been gaining market share from rivals such as Tesco and Sainsbury’s, helped by its focus on low prices, innovative promotions such as a Sunday lunch for four people for £4 and its popular fresh food ‘Market Street’, which includes an in-store baker, butcher and fishmonger.

In-store initiatives included launching more than 21,000 price cuts, offering promotions at half price rather than on a buy one get one free, and rewarding loyal customers with a £20 shopping voucher.

The company used much of a planned share buyback for 2008/2009 to buy the Co-operative stores last December.

“The board also believes that further investment opportunities may arise in the medium term and has therefore decided that the capital originally earmarked for share buybacks in the 2009/10 financial year should be retained within the business to give Morrisons maximum financial flexibility,” it said.

Chairman Sir Ian Gibson said: “This was another year of good progress for Morrisons as we continued to grow sales, profits and dividends, whilst also investing to generate future growth.”

Over the year Morrisons also completed its stores and brand rebrand, as well as opening a new abbatoir, extending its vegetable pack-house and starting work on a regional distribution centre.