Shares in Morrisons, the UK’s fourth-largest retailer, jumped more than 7% this morning (21 July) after the company raised its margin forecast for the full year.
Morrisons, which has prospered in the downturn through luring cost-conscious shoppers, said its ex-fuel, gross margin is expected to beat its original forecasts by around 40 basis points.
The retailer said higher sales volumes and its initiatives to boost margins were behind the improved guidance.
Morrisons also revealed that its margin initiatives, under its so-called “optimisation plan”, would also exceed expectations to the tune of GBP20m (US$28.4m).
Shopper numbers continue to rise, Morrisons said, thanks to its “fresh offering, keen positioning on price and promotions”.
“The business’ performance to date, the successful implementation of the optimisation plan and its continuing customer growth now give the board confidence that the company’s full-year results will be ahead of its earlier expectations,” Morrisons said.
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers said Morrisons’ “cost-conscious ethos continues to deliver”.
He added: “All in all, Morrison is continuing to apply pressure on the rest of the high street, marking out its territory as a prominent value retailer.”
Morrisons shares were up 7.6% at 272.5p at 09:13 BST this morning.