Morrisons turnaround continues with surge in profits

Morrisons chief David Potts said the grocer's turnaround 'has just started'. Picture: Mikael Buck/MorrisonsMorrisons chief David Potts said the grocer's turnaround 'has just started'. Picture: Mikael Buck/Morrisons
Morrisons chief David Potts said the grocer's turnaround 'has just started'. Picture: Mikael Buck/Morrisons

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Morrisons has reported a surge in full-year profits as the supermarket cements its turnaround and reaps the rewards of investment into cutting prices.

The Bradford-based grocer 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, with takings up 2.5 per cent in the fourth quarter.

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Revenues 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.

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He said: “Our full year of like-for-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 in an upward trajectory, as the company said its “Price Crunch” initiative has seen more customers come through its doors.

Morrisons, which has secured a deal to sell groceries through Amazon, added the internet titan’s lockers are now in more than 400 of its stores. In addition, following a successful trial, a similar roll-out is also planned with Doddle.

However, Morrisons 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 supermarket’s ill-fated era under ousted boss Dalton Philips.

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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.

But chairman Andrew Higginson said: “Food retail is a simple business, but it is not easy. Only consistent and outstanding execution differentiates.

“I am delighted that the whole Morrisons team are making a real difference. I am confident that strong execution will drive sustained dividend growth and improving returns for Morrisons shareholders.”