Blog: Invesco's Woodford ups Morrisons stake ahead of FY results

Michelle Russell | 11 March 2013

Invesco Perpetual's Neil Woodford has topped up his stake Morrisons ahead of the retailer's full-year results this week, making him the largest shareholder in the UK grocer.

Woodford may well have taken advantage of BlackRock's disposal of its 155m shares in Morrisons in January with the move, upping his stake to 7.7% from 5.3%, according to The Daily Telegraph. BlackRock reduced its holding from 10% to 4.2%.

Woodford's move comes ahead of Morrisons full-year figures on Thursday and a widely expected and long overdue move into online grocery sales.

Dalton Philips, who replaced Marc Bolland as Morrisons chief executive in 2010, inherited a business that had success emphasising its fresh food offer but one without an online presence or convenience store network.

Earlier this year, Philips emphasised that Morrisons was working to develop its strategy of becoming a multi-format, multi-channel retailer, the bones of which were laid out in 2011. An update to the market on the progress of this strategy and the next steps are expected to be set out on Thursday.

Significantly, the chief executive hinted in January that the group could be gearing up to enter the online grocery space and added Morrisons could even benefit from a "late mover advantage".

Analysts did warn at the time that this may not be the case given how "excruciatingly slow" the grocer has been to respond to emerging consumer shopping trends in food and grocery. However, Philips has been quick to dismiss concerns it has missed its chance to ride the online and convenience wave.

Morrisons has been active in developing its online capabilities by acquiring an online clothing retailer Kiddicare, a stake in US-based Fresh Direct and launching a wine website. But the industry has yet to see any action by the retailer in the food space.

As for its move into convenience, Morrisons had a target of having 70 c-stores open by the end of the year. It has opened around 13 to date and recently bought 62 from the administrators to UK retailers Blockbuster, Jessops and HMV as it looks to catch up with rivals Tesco and Sainsbury's in this channel.

 

The Invesco buy indicates confidence in Morrisons' strategy but some industry observers see the retailer as under-performing the market.

Shore Capital analyst Clive Black, who is forecasting continuing pre-tax profit to be lower than Morrison's consensus of GBP877m, is looking for detail on what Philips plans to do to improve matters.

Black says he is expecting the chief executive to outline the performance of its fresh format stores, give an update on the group's "broader self-improvement and modernisation plans", its plans for store openings and whether it is planning to fulfil any online grocery activities.

Philips certainly has his plate full if he is to deliver on the turnaround programme. Any thoughts on convenience and online will be watched very closely indeed by the industry come Thursday.


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