Morrisons reports ‘good strategic progress in tough trading year’
Print25 March 2013
UK supermarket chain Morrisons has reported its turnover increased by 3% to reach £18.1bn in the past year (2011/12: £17.7bn). However like-for-like sales (ex-fuel, ex-VAT) were down 2.1%(1) (2011/12: up 1.8%) Underlying profit before tax was likewise down by 4% to £901m (2011/12: £935m)(2)
Commenting on the results, Sir Ian Gibson, Chairman, said:"Although this has been a difficult year in trading terms for Morrisons as we struggled to grow sales in a tough consumer environment, we have delivered a 7% improvement in underlying earnings per share and announced a 10% dividend increase, in line with our previously stated policy. It has also been a period of significant strategic progress as we continue to lay the foundations for future growth".
Dalton Philips, Chief Executive, said:"The sustained pressure on consumer spending was reflected in our like-for-like sales performance, which was not as good as it should have been. We have implemented a range of measures to address this and are making good progress in improving our promotional effectiveness and in communicating our points of difference. Recent events have underlined why it’s so important that we tell our customers how and why we’re different and what our vertical integration really means for them. Food quality, provenance and the issue of trust are at the forefront of consumers’ minds and these are all areas where Morrisons has something genuinely different to offer.
Investing in long-term strategy
We continue to invest for the long term success of our business. Our fresh format offer is now in over 100 stores nationwide and we will continue to tailor the concept as we expand the rollout during the coming year. We are ready to accelerate the development of our multi-channel presence and our convenience operation is gaining real momentum acquiring over 60 new sites in recent weeks alone. We are therefore increasing our target for store openings in the coming year by 40% and now plan to have 100 stores trading by the end of the year.
Today’s announcement that we are launching an online food offer in 2014 is another important step in Morrisons strategy of being ‘Different and Better than Ever’. We may be a late entrant to the online food market but we have learnt from our involvement with Kiddicare and Fresh Direct. We have long been a leader in fresh food and our craft skills and vertical integration really set us apart from the competition. Ensuring that these points of difference translate into our online food offer will be a priority."
We will continue to implement a wide range of measures to address the sales performance of the business and progress our strategic initiatives, in order to provide a platform for successful long term growth. Our expectations are that the challenging consumer and market environment we saw in 2012 will persist through the coming year.
Looking towards convenience
Morrisons has announced the purchase of six HMV stores from the company’s administrators, Deloitte, which it will convert into Morrisons M local stores as part of its fast growing convenience estate.
The purchase comes in the same week that the supermarket secured 49 Blockbuster stores and on the back off acquiring seven former Jessops shops as it accelerates the expansion of its Morrisons M local offering. Morrisons hopes that the acquired stores, which have an emphasis on London and the South East, will be opened across the summer.
With these purchases, Morrisons looks set to exceed its target of operating 70 convenience stores by the end of 2013. Morrisons currently trades 13 convenience stores across the UK.
Morrisons is also offering its colleagues a £500 finder’s fee if they find convenience properties for Morrisons that are subsequently opened.
Gordon Mowat, Managing Director of Morrisons Convenience said:
"We have either opened or acquired 70 stores just one month into our financial year so we are pleased that we will exceed our 2013 target. Our focus is now on opening these stores as soon as we can as well as pushing on to secure even more sites. This is a big expansion year for us and we have got off to a great start."
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