Thursday market close: Morrisons drags down rival grocers

Shares in Morrisons came under pressure as the supermarket chain posted a 35 per cent plunge in first-half profits and said it would be closing a further 11 stores, adding to the ten it has already shut this year.

Morrisons headed lower after a slide in profits
Morrisons headed lower after a slide in profits

The Bradford-based grocer ended the session down 2.8 per cent or 5p at 170.9p, while market leader Tesco dropped 5.65p to 185.55p – a fall of 3 per cent.

Fellow “big four” retailer Sainsbury’s was also heading in the wrong direction, finishing the day 4.5p lower at 238.9p.

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There was a better performance for fashion chain Next, which rose 100p to 7,775p after unveiling higher first-half profits, although it warned it might have to hike prices to pay its staff the national living wage.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “The living wage is going to increase the pay of millions of people, which is hugely positive for these workers, though there is a cost which can be counted in jobs, prices and profits. We are beginning to see companies warning they are going to have to increase prices to cope with the additional cost, and we should expect more announcements of this sort.”

The FTSE 100 saw its three-day winning streak come to an end, with the blue-chip index falling 73.2 points to 6,155.81 after the Bank of England left interest rates on hold at their record low of 0.5 per cent for the 78th month and forecast a slowdown for the UK economy in the third quarter amid rising risks from turbulent global conditions.

On a day dominated by results from the retail sector, mobile phones and electrical goods giant Dixons Carphone added 7.6p to close at 427.5p as the group said it was “in very good shape to have another successful year” after reporting an 8 per cent rise in like-for-like revenues for the 13 weeks to 1 August, led by a 10 per cent surge in the UK and Ireland.