Morrisons’ sales fall, as boss highlights ‘food maker’ role
One of the big four supermarkets and UK’s second largest manufacturer of fresh food revealed total turnover down by 4.1% to £16.1bn in the year to January 31 2016.
Underlying profit before tax, pre-closure and restructuring costs fell to £302M compared with £413M in 2014/15.
Profit before tax rose to £217M compared with a loss of £792M in 2014/15.
A food manufacturer
Commenting on the results, Potts highlighted the retailer’s “unique” capability as a food manufacturer.
“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,” said Potts.
“I am confident these strengths will help us fix, rebuild and grow Morrisons.”
Potts claimed the supermarket had improved the shopping trip for customers and started the journey “to turnaround the business and make our supermarkets strong”.
‘Make our supermarkets strong’
Morrisons’ listening programme was informing and shaping the retailer’s six priorities that were driving improvements that customers were noticing, he claimed.
But turning the business around would take time and require sustained investment, according to the results statement.
During 2016/17, the retailer expected to realise the remainder of its £1bn three-year cost savings target.
The business expected to exceed its three-year targets for £600M operating working capital improvement and £1bn property disposal proceeds. Net debt for the 2016/17 year-end was predicted to fall to £1.4bn–£1.5bn.
Morrisons’ chairman Andrew Higginson added: “The team made good progress during the year, with lower debt once again a highlight. We are on track to deliver improved future profits and returns for shareholders.”
Meanwhile, last month Morrisons disclosed it had forged a key strategic distribution deal with online giant Amazon.
Morrisons – in the analysts’ view
“We believe that after a period of sustained turmoil and ultimately decline, about 10 months into Mr Potts reign Morrisons’ is in much safer hands, resulting in a more competitive business with a stronger financial constitution and a brighter future,” writes Shore Capital analysts Clive Black and Darren Shirley.
“Those foundations are the basis for us to believe that profit growth can be re-established here on, for already sound solvency ratios to further improve and for shareholder friendly initiatives to be considered as more of a probability than a possibility in due course. As such, the future is brighter for Morrisons’ shareholders in our view, making this a much more attractive stock to own and one that should not, perhaps, be considered for shorting [selling].”
Shore Capital acts as a broker to Morrisons and offers no recommendations on ’house stocks’.
