Morrisons comes up for air with quarterly rise in sales
Chief executive David Potts tempered expectations by telling investors there was still more to do
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Your support makes all the difference.Morrisons swung its sales into positive territory in an entire quarter for the first time in four years, as bosses started welcoming long-lost customers back into its stores.
Sales in the three months to the end of January rose 0.1 per cent, although its chief executive David Potts tempered expectations by telling investors there was still more to do.
Full-year sales dropped by 4.1 per cent to £16.1bn, with like-for-like sales down 2 per cent, but pre-tax profits hit £217m after a massive £792m loss a year earlier.
Mr Potts said: “It’s a bit of a mug’s game for a CEO to forecast like-for-like sales growth, because it’s very competitive. We are in a turnaround and I’ve always said it’s not going to be a straight line. It will zig-zag around.”
Underlying profits – which exclude one-off payments – fell from £345m to £242m, leading to the dividend being cut from 13.65p to just 5p.
Mr Potts added that simplifications in stores, and lower prices, were winning customers over after many started shopping at discount rivals Aldi and Lidl.
Plans include offering fewer lines, freeing up space on shelves for more of the most popular products, pushing Morrisons’ own-brand goods and introducing more of its Nutmeg clothing range.
Mr Potts said customers particularly appreciate that the retailer has its own farms and can control much of its supply chain, pointing out that local decisions can now be made such as Lincolnshire pork being sold in its Lincoln stores.
He also wants to make better use of car parks at stores by filling them with services such as car washes or mechanics to check over vehicles while their owners are in the stores.
Space in the supermarkets is also being filled by more services, such as Amazon lockers and Timpson locksmiths, while cafés are being upgraded.
A new agreement with Amazon – to provide Morrisons products to the website on a wholesale basis – was also praised by Mr Potts and he said he had no concerns that Amazon could set its own prices and potentially undercut Morrisons’ in-store prices.
The chief executive added that the current online delivery relationship with Ocado remained strong, but said negotiations were ongoing to decide what the future holds for the partnership.
Morrisons also revealed for the first time that it took in £403m in commercial income – where suppliers pay for advertising and marketing, or give rebates for sales targets being hit.
The company also cut the number of ways in which buyers squeeze cash out of suppliers from 37 to just three. At Tesco, tactics used against suppliers over commercial income led to the retailer being censured by the Groceries Code Adjudicator and facing a criminal investigation.
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