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Morrisons eyes online tie-up with Ocado as profits fall

Morrisons has confirmed that it is in talks to launch an online food store with Ocado after reporting that its full-year underlying profit before tax fell 4% to £901 million.

GENERAL MERCHANDISE

Morrisons eyes online tie-up with Ocado as profits fall

Morrisons has confirmed that it is in talks to launch an online food store with Ocado after reporting that its full-year underlying profit before tax fell 4% to £901 million.

The supermarket said it was in discussions regarding the licencing of Ocado's software and operating knowledge to launch an online grocery business in 2014. However, Morrisons said its decision to enter the online grocery market was not dependent on the outcome of the discussions.

Chief executive Dalton Philips said: "Today's announcement that we are launching an online food offer in 2014 is another important step in Morrisons strategy of being 'Different and Better than Ever'.  

"We may be a late entrant to the online food market but we have learnt from our involvement with Kiddicare and Fresh Direct. We have long been a leader in fresh food and our craft skills and vertical integration really set us apart from the competition. Ensuring that these points of difference translate into our online food offer will be a priority." 

In the year to 3 February, like-for-like sales at Morrisons fell by 2.1%, compared to a jump of 1.8% a year earlier. Sales rose 3% to reach £18.1 billion.

Philips added: "The sustained pressure on consumer spending was reflected in our like-for-like sales performance, which was not as good as it should have been.

"We have implemented a range of measures to address this and are making good progress in improving our promotional effectiveness and in communicating our points of difference." 

During the year, Morrisons launched 5,000 of its own brand products with M Savers its fastest growing own label brand. 

The supermarket said that its first 12 M local convenience stores had performed well and that its first London stores were now open. A total of 17 new supermarkets were also opened in the year.

Morrisons plans to invest further in more stores and expects capital expenditure to be £1.1 billion in 2013/2014.

The supermarket said it had made good progress in expanding its manufacturing capability with the  Winsford fresh meat facility and fresh seafood site in Grimsby operational and performing well.

It also launched the Morrisons Cellar online wine shop and opened three new Kiddicare stores in the period.

Philips said he expected the challenging consumer and market environment to persist throughout 2013, adding: "We will continue to implement a wide range of measures to address the sales performance of the business and progress our strategic initiatives, in order to provide a platform for successful long term growth."

"Morrisons are playing catch up with the rest of sector," commented Graham Brown of Teleperformance, one of the world’s largest operators of contact centres. "Although late to the party they can learn from the mistakes of others by ensuring they have a fully joined up strategy for managing their customers across these different channels. If they don't customers will continue to vote with their feet."
 

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