Morrisons to follow "bold" strategy after posting £176 million loss
While turnover fell by 2% to £17.7 billion, like-for-like sales excluding fuel dropped by 2.8%. The supermarket also incurred £903 million in one-off charges due to property and IT costs and a disappointing performance at its Kiddicare online baby products retailer.
Morrisons said it had been held back by its lack of a meaningful presence in online and convenience and had also faced increased competition from discounters. As a result, the supermarket plans to accelerate growth in new channels after launching its online grocery business in December 2013 and will also slash costs and invest in cutting prices to hit back at discount chains Aldi and Lidl.
Chief executive Dalton Philips said: “The strategy we are announcing today is a bold and comprehensive response to the fundamental structural changes that are taking place in grocery retail.
“We are significantly reducing our cost base and will invest £1 billion into our proposition over the next three years, to improve our value even further and to defend and strengthen our competitive position. Customers will see this in our stores as well as in our fast growing online and convenience offers. At the same time we will exit non-core activities, significantly reduce our capital expenditure and deliver improved operating cashflow and return on capital employed.”
He added: “I’m confident that Morrisons will emerge from this period of necessary change as a more focused, more distinctive value leader and well positioned to compete sustainably in the new grocery landscape.”
The supermarket also confirmed plans to make £1 billion worth of property disposals over the next three years and will look to sell Kiddicare in 2014 following a disappointing financial performance.
Morrisons chairman Sir Ian Gibson said: "In trading terms this has been a disappointing year for Morrisons, with consumer confidence and market conditions continuing to be challenging. It has however been a period of significant strategic progress as we lay the foundations for a stronger future. Our financial position remains strong.”
The supermarket said it expects the challenging conditions of 2013 to continue, which is reflected in its profit expectations. Morrisons now expects underlying profits in 2014/15 will be in the range of £325 million to £375 million, after charging £65 million of new business development costs and £70 million of one-off, non-recurring costs.
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