Morrisons to unveil £1bn property sale after profits slump
SUPERMARKET giant Morrisons will this week report its worst annual profit drop in eight years as consumers shun superstores and instead buy from convenience shops and websites.
The grocer is expected to say on Thursday that profits fell by more than £100million to about £785million. That would be the worst performance since 2006 following its disastrous merger with Safeway.
The supermarket will also unveil ambitious plans for a tactical sale and leaseback of property worth up to £1billion in order to return cash to shareholders.
The move is aimed at softening the blow for investors and winning back support from the City.
In addition, it is working on a secret trial that could lead to the launch of a loyalty card by Christmas in a bid to fend off intense competition from rivals.
Bradford-based Morrisons has a lack of exposure to convenience shops and the internet which, coupled with the absence of a customer loyalty programme, has left it more vulnerable than its three larger rivals to more cautious spending.
It is also struggling to fend off an invasion by German retail chains Aldi and Lidl, which are annexing market share from stores including Tesco, Sainsbury’s and Asda.
Morrisons launched an online store in January following a £216million agreement with partner Ocado.
It also aims to have 200 convenience stores by the end of the year, which it hopes will stop its shoppers from straying to other chains in between their main shopping trips.
Tesco last month laid bare the problems for large stores when it said like-for-like sales at its Extra hypermarket division had dropped 3.1 per cent over the Christmas period. That compared to a 1 per cent increase at its convenience stores and a 10 per cent rise for online grocery delivery.
Morrisons admitted in January that its performance over Christmas had been ‘disappointing’ when it shocked investors with a 5.6 per cent decline in like-for-like sales in the six weeks to January 5.
One City source said: ‘Morrisons is setting out for the long haul and this week the stock market will hear its broadest and most comprehensive strategic plan to date.’