Profits on rise as Morrisons turnaround plan takes off
● Full-year results show impact from business revamp ● But supermarket giant sounds note of caution for 2017
Supermarket major Morrisons has reported a surge in full-year profits as the group cements its turnaround and reaps the rewards of investment into cutting prices.
The Bradford-based grocer yesterday reported a 49.8 per cent rise in pre-tax profits to £325 million and notched up like-for-like sales growth of 1.7 per cent in the year to 29 January and 2.5 per cent in the fourth quarter.
Overall revenue came in at £16.3 billion, up 1.2 per cent, as the results solidified the chain’s return to form under chief executive David Potts.
He said: “Our full year of likefor-like sales and profit growth was powered by listening to customers, and shows what our hard-working team of food makers and shopkeepers can do.
“But, it’s only one year. Our turnaround has just started, and we have more plans and important work ahead.
“If we keep improving the customer shopping trip, I am confident that Morrisons will continue to grow.”
On an underlying basis, profits rose 11.6 per cent to £337m, the first time in five years they have moved upward. The company said its Price Crunch initiative has seen more customers through its doors.
Morrisons, which secured a deal to sell groceries through Amazon under Potts, noted that the internet titan’s lockers are now in more than 400 of its stores. A similar roll-out is also planned with parcel service Doddle.
However, it sounded a note of caution on the year ahead, warning of the “impact on imported food prices if sterling stays at lower levels”.
Food prices are beginning to rise on supermarket shelves as producers begin to pass on soaring import costs triggered by the Brexit-hit pound.
As well as the deal with Amazon, Potts has ploughed investment into price cuts and called time on under-performing stores in his attempts to turn the page on the chain’s ill-fated era under ousted boss Dalton Philips.
His efforts come as the grocery sector’s so-called Big Four – Tesco, Asda, Sainsbury’s and Morrisons – remain locked in a bitter price war sparked by German discounters Aldi and Lidl and face further challenges from an expected slowdown in consumer spending.
George Salmon, equity analyst at investment firm Hargreaves Lansdown, said: “After years in the doldrums, the turnaround is becoming more tangible at Morrisons. For the first time since 2012, the group has delivered increases in both like-for-like sales and profit before tax.” Three Scottish-based female entrepreneurs have been crowned winners in the growth category at this year’s Accelerateher Awards, as revealed at the Investing Women Ambition and Growth conference in Edinburgh yesterday. Celebrating are Rebecca Pick of Pick Protection, pictured, Heather Mcdonald of Wooha Brewing and Polly Van Alstyne of Scottish Biotechnology, who have all secured an all-expenses-paid trip to meet US investors in California next month.