Morrisons is fighting back

MORRISONS is targeting extra profits of up to £ 100million from developing its online appeal and utilising its food- making skills as it looks to build on its first quarterly sales rise for four years.

David Potts, chief executive of the UK’s fourth biggest grocer, believes there are more opportunities to broaden the business following a recent fresh food supply deal with online giant Amazon, an agreement with Ocado to extend its online deliveries nationwide and convenience store pilots with Motor Fuel Group.

Medium- term profits will also be improved from lower interest charges as its debts are reduced. Morrisons is on track to take £ 1billion of costs out of the business over three years to 2017.

Underlying annual pre- tax profit at the chain, which recently won back its place in the FTSE 100, was down 27 per cent to £ 302million on 4.1 per cent lower turnover of £ 16.1billion.

But the turnaround plan under Potts, the former Tesco executive brought in a year ago to revive Morrisons’ fortunes, delivered a 0.1 per cent rise in fourthquarter sales at established stores, its first positive performance in 16 quarters.

Potts, pictured, said: “We’ve got our tails up a bit on trade. Customers are coming back and satisfaction levels are well up year on year.

“They want us to be more competitive – to have lower and more consistent prices on items they buy regularly. We will keep cutting prices.

“We are creating a leaner, more effi-cient business. Our identity is becoming clearer. We are a food- maker and shopkeeper which makes us different to the competition.

“There is an opportunity to increase the popularity of the brand and we are improving the range of products produced at our manufacturing sites.”

Tristan Chapple, head of research at Phoenix Asset Management, which owns 1 per cent of Morrisons, said: “Morrisons lost its way when it stopped focusing on giving customers what they wanted and expected from it – great value, great products and great service.

“Management have a strategy to fix and rebuild the business using a backto- basics strategy. They are asking their customers what they want and using feedback to make changes.

“The notable improvement in sales towards the end of the year is a sign the strategy may be starting to bear fruit.”