UK retailer lays bare full scale of trading woes
British supermarket group Morrisons laid bare the full scale of its trading woes today when it disclosed annual profits could be as low as £50m (€74m).
The firm estimated profits before tax, exceptionals and goodwill would be between £50m (€74m) and £150m (€212m) – well below the equivalent £320m (€477m) figure posted last year.
Morrisons had said last month that it was unable to give any guidance on profits, leading some analysts to predict they may be as high as £275m (€410m).
The group chaired by Sir Ken Morrison has issued a series of profits warnings after experiencing trouble integrating last year’s £3bn (€4.4bn) purchase of Safeway.
It said today that it was working with its accountants to provide clearer figures and would comment further in a trading update at the end of July.
In a statement to the stock exchange, it said there was still “every indication” that its financial performance would improve “significantly” after conversion of Safeway stores to the Morrisons format was complete.
The Bradford-based group said in a profits warning last month that costs associated with running both Morrisons and Safeway were likely to remain higher and were taking longer to eliminate than hoped.
Morrisons had never warned on profits before the acquisition.
At its annual meeting two weeks ago, Sir Ken announced he was stepping down from the day-to-day running of the firm to concentrate on its longer term strategy.
He pledged to stay with the group for at least another year to see through the integration of Safeway.
The company said at the time that recent sales had been encouraging, with like-for-like sales across the group 5.4% higher in the first 15 weeks of the year against a 4.1% hike in the first six weeks.
However, sales at the original Morrisons stores were lower as they lost trade to converted Safeway outlets.
