Higher sales boost Morrisons
British supermarket chain Morrisons said today that it had been encouraged by recent trading after like-for-like sales showed a 5% improvement.
The group, which has been beset with problems following the acquisition of Safeway, also stuck by profits forecasts and said it was on track to have all 360 stores in its estate under the Morrisons banner by November.
Chief executive Bob Scott said much work remained to be done, but that the sales figures for the 25 weeks to July 24 showed the benefits of the company’s Safeway store conversion process.
He added: “We are encouraged by the 5% like-for-like sales increase. We believe this is as good as anybody, apart from Tesco, and better than many of our competitors.”
Shares rose 4% after the update, as investors welcomed better news from the company following a string of profits warnings.
Today’s update revealed that those stores converted to the Morrisons format increased sales by 11.6% in the period – 15.7% higher when the period prior to the change-over is stripped from the figures.
Continuing Safeway stores awaiting conversion traded positively, with sales increasing by 3.9% while the core Morrisons estate showed growth of 1.1%, falling to minus 2.7% when fuel sales are excluded.
The company said the decline was due to the impact of some nearby Safeway stores being sold to competitors as part of the regulatory requirements following its £3bn (€4.3bn) acquisition of the chain last year.
The takeover transformed Morrisons into the fourth-biggest food retailer in the UK, but has also led to its first-ever profits warning.
It has since employed KPMG to review its financial forecasts, but said today that the results of that review would not be released until October.
Morrisons conceded in May that costs associated with integrating the two businesses were likely to remain higher and take longer to eliminate than hoped.
More than £2bn (€2.9bn) has been wiped off the value of Morrisons since the Safeway takeover and the supermarket group shocked investors last month by saying its profits for this year could be as little as £50m (€72.3m).
Morrisons had never warned on profits before the Safeway deal and analysts had pencilled in a surplus of more than £600m (€868m) just six months ago.
Subsequent criticism prompted founder and chairman Sir Ken Morrison to step down from day-to-day running of the firm in order to concentrate on the firm’s strategic vision.
And in moves to bolster its board, the firm appointed former Littlewoods chief executive Susan Murray, Nigel Robertson, who helped set up online grocery shopping operation Ocado, and Brian Flanagan, who worked for confectionery group Mars for 26 years. It is still looking to recruit another director.
