Morrisons profits come in at top end of guidance despite slump

For the 52 weeks ending October 30, 2022, Morrisons reported a 15% drop in full-year profits to £828m. Total revenues, including fuel, were up 2.2% to £18.4bn but like-for-like sales excluding fuel were down 4.2%. However, Morrisons reported sequential improvements in like-for-likes over the third and fourth quarters of the period. 

Group like-for-like sales were up 2.5% over the Christmas period, excluding fuel. The grocer noted: “With continued high food inflation, rising interest rates, an ongoing cost-of-living crisis and the war in Ukraine set to enter its second year, there is a continuing sense of uncertainty in consumer sentiment.”

However, the retailer announced earlier in January an investment in reducing prices across 820 everyday grocery items, bringing the total number of reductions to more than 1,000 products. 

Morrisons said that in the coming 2022/23 financial year “we are confident that improved trading momentum and our various cost-saving programmes will more than offset these and expect EBITDA to be up year on year”.

It has also identified “several working capital opportunities and is now planning for an improvement of at least £500m in the medium term”.

Chief executive David Potts said: “In a very difficult period for consumers and businesses alike, we are continuing to do everything we can to keep prices down for customers and to support our colleagues.

“As a vertically integrated retailer, we felt the impacts of last year’s racing inflation more immediately than our competitors and this did have an impact on our pricing position. However, since October, we have executed a rolling programme of meaningful price cuts, price freezes and fuel promotions for our customers and our competitive position has considerably sharpened.

“I’m particularly pleased with the impact of the changes to our entry-level range in early January with over 130 Savers prices cut and the range increased, which has been really popular with our customers. 

“Our Christmas trading continued the positive momentum of the last two quarters with a 2.5% increase in sales against last year, as we pulled out all the stops to help our customers celebrate with style and great quality, despite the economic uncertainty.

“Looking ahead, this current year has many opportunities. We have clear plans in place to continue to invest in price and in hours in our stores; to open new supermarkets and further refresh the core estate; to invest in McColl’s and accelerate the conversion programme; to develop further the fast-growing My Morrisons app and to grow volumes through our unique food-making operations around the country.

“Together, I’m confident these moves will enable us to make further significant progress in developing Morrisons into a broader, stronger, more accessible and more popular business.  

“Throughout the year, Morrisons colleagues once again rose to the occasion and their warmth, professionalism and passion for looking after our customers make Morrisons what it is today.

“Their understanding of the impact of the cost-of-living crisis on individuals, families and communities, and their determination to give help and support, is evident in our stores every day and I want to thank them for their phenomenal effort over last year.”

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