Bosses say Morrisons will exceed profit target of Â£ 430million this year despite falling sales
Morrisons will exceed its profit target of Â£ 430million this year despite falling sales, the bosses said yesterday.
The supermarket group said results for the six months to early August were “very strong”, but warned that supply issues and inflationary pressures continued to weigh on the sector.
The numbers will be welcomed by the two private equity bidders, Clayton, Dubilier & Rice (CD&R) and Fortress, as they prepare for an auction showdown to end a four-month takeover battle.
Push back: The supermarket group said results for the six months to early August were “very strong”
CD&R leads with a recommended offer of 285 pence per share, or Â£ 7 billion, beating the 270 pence offer offered by Fortress last month.
In its half-year figures, Morrisons faced tough comparisons with booming sales from the first foreclosure. The company announced a 0.3% drop in like-for-like sales, excluding fuel, in the six months to August 1 compared to 2020.
Pre-tax profit fell 43.4% to Â£ 82million, due to Â£ 41million in Covid-19 costs – mostly due to staff absence during the ‘pingdemia’ – and 80 million million pounds of lost profits in cafes, fuel and take out.
Online sales continued to skyrocket, increasing 48% in the half year from 2020, meaning they more than tripled their online business during the pandemic.
Morrisons on Amazon has grown to 60 cities, covering 60% of the population, and now accounts for 10% of sales in the majority of Morrisons stores. Deliveroo home delivery increased to 328 stores, from 183.
The group’s wholesale activity grew by 18.1% over the semester compared to 2020, and “is making a lot of money”.
The supermarket also plans to convert 350 McColl’s stores to Morrisons Daily by the end of November 2022, up from a target of 300 by the end of 2023, as part of its expansion into convenience retail.
Bosses said Morrisons would exceed profit by Â£ 431million this year, which is the figure he would have reached in the year through the end of February if he had not returned the alleviation of coronavirus activity rates.
Amid growing concerns over rising prices in the UK, Managing Director David Potts also warned of “industry-wide” inflation. Prices have risen over the past three months, after several quarters of deflation, due to rising commodity costs, a tenfold increase in shipping, and because businesses are forced to pay more for goods. truck drivers, he said.
There is particular price pressure on wheat and beef products, but consumers can expect small price increases at this time as the grocery market is very competitive.
Morrisons – founded in 1899 in Bradford – also continues to face shortages of water, soft drinks, wine, crisps and pet food due to the shortage of truck drivers.
It tries to alleviate the problem by delivering direct from suppliers to its supermarkets, missing distribution centers, and stacking up to twice as much merchandise per truck.