Morrisons ‘finds mojo’ with profits expected to surge 54%

MORRISONS will update the market on its annual results next week as it continues to reap the rewards of investment into cutting prices and overhauling stores.

The grocery giant is expected to reveal a 54 per cent rise in pre-tax profits to £335 million, up from £217m in 2016. Analysts at Jefferies are pencilling in like-for-like sales growth of 1.8 per cent.

Jefferies’ James Grzinic said: “Much has been achieved in the past two years through reinvestments into store hours, improved assortment, sharpened value and a catch-up refurb programme (with about one-third of stores done in the past 18 months).”

An annual sales and profits boost would solidify the grocer’s bright start to 2017 when it hailed its strongest festive sales growth for seven years.

Chief executive David Potts, who was parachuted in to firm up sales two years ago, said the group had “found its mojo” after a sparkling festive performance saw it post a 2.9 per cent hike in like-for-like sales excluding fuel for the nine weeks to January 1.

The Bradford-based firm also emerged as the fastest-growing retailer within the Big Four, increasing its market share for the first time since June 2015 in the 12 weeks to January 29, according to Kantar Retail.

Mr Potts has secured a deal to sell groceries through Amazon, ploughed investment into price cuts and called time on under-performing stores in his attempts to turn the page on the supermarket’s ill-fated era under ousted boss Dalton Philips.

His efforts come as the grocery sector’s leading players are gripped by a fierce price war with discounters Aldi and Lidl and face further challenges from an expected slowdown in consumer spending.

Food prices are beginning to rise on the supermarket shelves as producers begin to pass down soaring import costs triggered by the Brexit-hit pound.