Investors brace for Morrisons plunge

MORRISONS will this week post a sharp fall in full year profits as the fierce price war sweeping through the sector takes its toll on what has been one of the weakest players.

But despite the slump former chief executive Dalton Philips is expected to receive a £3m pay- off havi ng been o ust e d last month.

Britain’s fourth biggest grocer has struggled to kick start growth despite pledging £1bn for dropping prices last year in response to inroads made by discounters Aldi and Lidl.

Morrisons has suffered more than most being late to the party with its online grocery site, a partnership with Ocado, and its move into smaller convenience stores. These are the fastest growing areas in food shop- ping. Its supermarket business has also been held back by antiquated computer systems and a poor prese nce in t he s outh of England.

Analysts forecast a 56pc fall in profits to £342m with underlying sales down 5.9pc having fallen 2.8pc a year ago.

Last month Philips paid the price f or the slow progress and new chairman Andy Higginson, a former finance director at Tesco, wielded the axe.

Higginson stands accused of recreating a mini-Tesco by hiring former colleague David Potts as chief executive. Potts starts later this month.

Clive Black, an analyst at Shore Capital said: ‘ We believe that he will bring focus and pace to Morrisons, a business where we view the current strategy as being sound but the execution i n particular needs correction.

‘We believe the insights and emphasis that a sharpeyed Potts will bring should create a firmer basis for an improvement in sales at the company, and we know that the market is particularly sensitive to sales momentum in retail at this time.’

All of the Big Four supermarkets have suffered from shrinking market share and suffered pressure on sales as customers change their shopping habits and spend less.

Investors will also be keen for an update on the firm’s dividend policy. While some had thought it would be cut last year to fund the price drop it was maintained. The firm has recently begun to show signs its strategy was gaining traction j ust as Philips departed.

Sales were down by 0.4pc in the 12 weeks to February 1, according to Kantar Worldpanel data.

This was better than Asda, where sales fell 1.7pc, and Sainsbury’s where sales slipped 1pc in the same period.

Only Tesco, out of the big four supermarkets, posted a rise in sales of 0.3pc.

Analysts at Jefferies said they hoped to see signs of more cost savings with further cuts in management levels in the update.

In June the firm said it would slim down its management structure, which would lead to the axing of up to 2,000 mainly management jobs.