Morrisons had another dreadful year.
The supermarket on Thursday put out its full-year results and near enough all the key metrics are going down. Here are the highlights:
- Sales: excluding fuel, down 2%; including fuel, down 4.3%;
- Revenue: down 4.1% to £16.1 billion;
- Profit: down 29.9% to £242 million.
The tanking sales and profits follow Morrisons’ worst results in 8 years last year. You don’t have to be a statistical genius to work out that these are worse. But analysts at Jefferies say in a note on Thursday morning that the results contain “no major surprises” and it looks like the supermarket is “on the mend.”
Morrisons, like the other “Big Four”, supermarkets has been struggling to battle the rise of discounters like Aldi and Lidl. What’s more, Morrisons is lagging behind it’s “Big Four” rivals in things like online groceries and convenience stores, compounding problems.
CEO David Potts says in today’s statement:
By improving the shopping trip for customers, we have started the journey to turnaround the business and make our supermarkets strong. Our listening programme is informing and shaping the six priorities that are now driving the improvements that customers are noticing.
Our strong balance sheet and cash flow provide the platform for turnaround and growth, but what makes us truly unique as food maker and shopkeeper is the personality and dedication of our thousands of colleagues. I am confident these strengths will help us fix, rebuild and grow Morrisons.
Morrisons recently sold off its “M Local” convenience stores after they proved to be a costly and unprofitable experiment. Morrisons has also been slashing jobs and closing stores in a bid to cut down costs. But the supermarket needs to find growth from somewhere.
One area growth might come from is a deal recently struck with Amazon. Morrisons signed a supply agreement with Amazon which means “hundreds of Morrisons products will be available to Amazon Prime Now and Amazon Pantry customers,” according to a statement at the time.
In a strategy update within the results, Morrisons says it’s now moving on to the second two phases of its three phase turnaround plan — rebuild and grow. Morrisons says:
We now expect £50m-£100m incremental UPBT [underlying profit before tax] from opportunities we have identified within online, manufacturing, wholesale, popular and useful services and, as debt falls, lower interest costs. The recent wholesale supply agreement with Amazon and franchise convenience store pilots with Motor Fuel Group are examples of how Morrisons can become broader and stronger.
The company says it expects to hit its £1 billion cost saving target in the year ahead, but warns: “The turnaround will take time and will continue to require sustained investment in the proposition.”
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