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Turnround efforts at WM Morrison, the UK’s fourth-largest supermarket chain, made further progress in its last financial year as it increased profits by almost 50 per cent despite intense competition in the grocery sector.
Revenues in the year to January 31 came in slightly above consensus forecasts, up 1.2 per cent to £16.3bn despite the company closing a number of stores.
Like for like sales increased by 1.7 per cent, with a particularly strong 2.5 per cent climb in the final quarter. In January the company said the introduction of more premium products and improved technology helped it to its strongest Christmas period in seven years.
Underlying profit before tax, the company’s preferred performance measure, increased by 11.6 per cent to £337m, at the upper end of the higher forecasts it gave in January. Reported profit before tax increased by 49.8 per cent, to £325m.
The results mark Morrisons first year of like for like and underlying profit growth in five years. Chief executive David Potts took charge of the retailer in 2015 after a four-year slump in sales and a series of strategy U-turns, but has pushed through a series of drastic changes to cut costs, reduce debt and win back market share.
The company said it cut costs by £393m during the year, bringing its three-year total to £1.04bn, with further savings planned through improvements such as an automated ordering system.
Morrisons said it is “confident” about its progress and the outlook for the year ahead, but said that the weakness of sterling has created some uncertainty about imported food prices, while it also expects depreciation, pension and wage costs to increase. It added, however, that “all of this is incorporated into our plan”.
Mr Potts said:
Our full year like-for-like sales and profit growth was powered by listening to customers, and shows what our hard-working team of food makers and shopkeepers can do. But it’s only one year. Our turnaround has just started, and we have more plans and important work ahead. If we keep improving the customer shopping trip, I am confident that Morrisons will continue to grow.