Morrisons fares better than expected in challenging market
Morrisons has reported a better than expected fall in first half profits as it struggles against challenging market conditions.
In the half year to 29 July, the supermarket’s pre-tax profit fell from £449 million to £440 million which was above analyst’s forecasts of £434 million.
While like-for-like sales, excluding VAT and fuel, fell by 0.9%, turnover for the period was up 2.3% to £8.9 billion. Total store sales rose by 1.3% including a contribution from new space of 2.2%.
Company chairman, Sir Ian Gibson said: "With ongoing commodity inflation continuing to weigh on already fragile consumer confidence and market conditions becoming ever more challenging, we have had to work even harder for our customers during the first half."
Underlying profit before tax increased by 1% to £445 million from £442 million in the same period last year.
Morrisons said it had made good progress with its new Fresh Format which had been launched in 45 stores and was on track to be in over 100 stores this year. It also expects to open up to fifteen additional convenience stores by the end of this year as a prelude to accelerating the roll-out programme in 2013/14.
In addition, the company is planning its first online offer with the launch of the Morrisons Cellar wine range, with fulfillment from a distribution centre in Peterborough.
Morrisons said it is reducing its new space target by 200,000 sq ft to 500,000 sq ft for the current financial year and by 300,000 sq ft next year as it looks to maintain a tight focus on its resources.
Dalton Philips, chief executive, said: "Although the sustained pressure on consumer spending was reflected in our like-for- like sales performance, we have made further good progress against our strategic objectives - the building blocks which are the foundations of the future success of our business.
"By the end of the year our new Fresh Formats will be in over 100 stores and we are now ready to launch our convenience stores in London supported by our new distribution centre. We have also extended our food production capabilities and will launch wine as our first online category.
"We expect to make further progress in the second half of the year."
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