WM Morrison: from survival to profit
Morrisons, Britain’s fourth largest supermarket group reported a rise in quarterly underlying sales on 12 March, though its rate of growth slowed somewhat from a warm weather boost in the second quarter.
The Bradford, northern England, based grocer said total like-for-like sales, excluding fuel, rose 5.6 percent in the 13 weeks to 4 November, its fiscal third quarter - a twelfth straight quarter of underlying growth.
The performance compared negative to analysts’ average forecast of growth of 6.1 percent, and growth in the previous quarter of 6.3 percent, which, helped by hot weather and the soccer World Cup.
A few years Morrisons ago was fighting for survival. Now it seems well on track for future growth and profit. Andrew Higginson, Chairman, says:
“In a challenging period for customers and an ever-changing British retail scene, the turnaround at Morrisons has continued to progress well. The team has now completed four years of important work, building Morrisons as a broader, stronger business. I am delighted that sales and profit again grew strongly, and that we are able to share that growth with our shareholders through increased dividends.”
David Potts, Chief Executive, says:
“A third consecutive year of strong sales and profit growth, and a total annual dividend up over 150 percent during those three years, show the Morrisons turnaround is well on track. This turnaround is based on improving the shopping trip for customers, making Morrisons more popular and accessible.”
“Most pleasing of all was another big increase in customer satisfaction, now up a full 20 percentage points in the last four years, which is all down to the friendliness and expertise of our team of unique food makers and shopkeepers.”
“We remain confident that Morrisons still has many sales and profit growth opportunities ahead and expect that growth to be meaningful and sustainable. We also continue to expect free cash flow generation to remain strong.”
“Reflecting progress so far and our expectations, we are today announcing a further special dividend of 4.00p per share, taking the total dividend for the year to 12.60p. We will retain a strong and flexible balance sheet and will be guided each year by the principles of our capital allocation framework in assessing the use of free cash flow.”
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The supermarket was founded in 1899 by William Morrison as an egg and butter stall in Rawson Market, Bradford before expanding into a national chain. A period of expansion, including a poorly executed takeover of its rival Safeway, left Morrisons facing issues that were aggravated by a highly competitive market that has been disrupted by the growth of Aldi and Lidl.
Morrisons, which is the smallest of the Big Four supermarkets behind Tesco, J Sainsbury and Asda, has spent the past four years fighting to recover from a dark spell in which it was losing customers and sales.
Mr. Potts (61) a former Tesco executive hired to do a business turnaround has focused on strengthening the balance sheet while refitting shops, offering greater levels of service and improving its efficiency.