UK: Morrisons books bumper profits

Morrisons today (11 March) booked a 21% jump in annual underlying profits, driven by increased customer footfall and strides made under the company's “optimisation programme”.

The UK supermarket operator revealed that underlying profits rose to GBP767m (US$1.15bn) in the 12 months to 31 January, up from GBP636m last year.

Turnover rose 6% to GBP15.4bn. Like-for-like sales, excluding fuel, also rose 6%. Sales gains were driven by increased customer numbers, Morrisons said, with weekly average footfall up 7%.

The company also revealed that it successfully completed its margin improvement “optimisation plan” this month, “with all key targets exceeded”.

“Once again our focus on fresh food and great value appealed to shoppers everywhere, and we have successfully grown sales and profits to record levels. We completed delivery of the Optimisation Plan first launched four years ago, and we are well on the way to cementing our position as the Food Specialist for Everyone,” chairman Sir Ian Gibson said.

Over the course of the year, Morrisons opened 43 new stores throughout the UK. The retailer has focused on store openings in regions where it is under-represented – particularly in the south of the country – as well as expanding its number of smaller convenience outlets.

Looking to the coming year, the company said that it anticipates conditions will remain “challenging”, with value remaining a “high priority” for consumers. 

Nevertheless, Morrisons insisted that it remains well-positioned to drive sales growth and market share gains.

Responding to the results, Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, told just-food that the group's emphasis on value would continue to "fuel prospects" for Morrisons.

“Profits have exceeded analyst forecasts, whilst a rock solid balance sheet is underwriting a new store investment programme – 43 new stores have opened over the course of the year. Furthermore, the group’s efficiency plan has delivered across the board, with the potent combination of sales growth and prudent finances underpinning a 41% increase in the dividend payment over the course of the full year," he said.

However, on the downside, Bowman warned that management remains "understandably cautious" in its outlook. 

"The arrival of a new chief executive at the end of the month provides a degree of uncertainty," he added.

Dalton Philips will join Morrisons as chief executive at the end of this month following the departure of Marc Bolland, who is set to take the helm at Marks and Spencer.

For Morrisons' earnings release click here and click here for the retailer's expansion plans for the next three years.