High street chain shelves woes to see shares soar
SUPERMARKET boss David Potts hailed a “new Morrisons” after the Bradford-based grocer yesterday delivered a 40pc jump in profits and its seventh quarter of sales growth in a row.
Since taking charge of Morrisons two years ago, Mr Potts has stabilised the once struggling retailer by luring shoppers back to its stores with lower prices, refurbishing shops and improving its food ranges with the addition of a premium “Best” line.
“The most important thing is the recovery of our supermarkets but we have also been building a broader business,” said the Morrisons boss. Most recently, the supermarket has been making the most of its British manufacturing facilities and supply chain by sealing wholesale deals with Amazon, petrol station group Rontec and most recently convenience chain McColl’s.
The grocer has said it expects to make £1bn of wholesale supply sales in due course. “We are not a one-club golfer,” said Mr Potts. Morrisons has been focused on striking “capital light” supply deals, rather than engage in the convenience takeover frenzy sparked by Tesco’s £3.7bn swoop on Booker, or the bidding contest between Sainsbury’s and Co-op for Nisa. “We said we would look at wholesale 18 months ago, before it became fashionable,” said Mr Potts in reference to the recent spate of dealmaking.
Morrisons’ pre-tax profits jumped to £200m in the six months to July 30, up from £143m in the same period of last year. Underlying profits, meanwhile, rose by 12.7pc to £177m, beating analyst forecasts. “Morrisons has quite simply been transformed over the past two years,” said John Ibbotson, director of retail consultancy Retail Vision. “Given the cut-throat market we are in, this has been one of the great retail turnarounds,” he added.
Like-for-like sales rose by 3pc over the half year, compared to a rise of 1.4pc in the previous year. Its shares closed down 5.1pc at 232.4p.