Morrisons' first half profits slide
Morrisons saw its pre-tax profit decline by £105 million to £239 million in the first half of its financial year as the supermarket continued to implement its turnaround strategy.
In the six months to 3 August, total turnover dropped by 4.9% to £8.5 billion while like-for-like sales, excluding fuel, fell by 7.4% However, the supermarket said it had seen some initial signs of improvement following the implementation of its turnaround plan announced in March.
Morrisons said: “While like-for-like sales performance is yet to improve, there are some encouraging initial trends. There is still a lot of hard work ahead, and the process will take time. Our initiatives are on track and we anticipate that these will start to benefit our sales performance towards the end of the second half.”
The supermarket said investments to improve and modernise the business are progressing well with a simplified in-store management structure introduced and over 2,000 SKUs removed as part of a range reduction strategy. In addition, its strategy of lowering prices has driven a volume recovery.
Morrisons chief executive Dalton Philips said: "We are six months into the three-year plan that we set out in March and, although it is early days, I am encouraged by the progress we have made.
"There is an enormous amount of change and modernisation flowing through our core business, much of it enabled by new systems. Price investment, in-store improvements, and better products were all key components of the work undertaken in the first half, and the Morrisons card launches soon. Our new growth channels - online and convenience - are progressing well, and our cost-savings and cash flow plans are both on track to achieve our ambitious three-year targets."
He added: "Although it is too early to see the benefits of the three-year plan in the sales line, Morrisons is getting back on the front foot, and implementing change and innovation at real pace throughout the business. We are meeting the challenges of structural change with decisive action and are on track to become a more distinctive value retailer for the next generation of grocery retail."
Morrisons said its full-year profit expectations are on track with 2014/15 underlying profit before tax expected to be in the range £325 million to £375 million, after £65 million of new business development costs and £70 million of one-off costs.
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