Morrisons turnaround continues as profits soar

morrisons profits

Supermarket boss David Potts hailed a “new Morrisons” on Thursday after the Bradford-based grocer delivered a 40 per cent jump in profits and its seventh consecutive quarter of sales growth.

Since taking charge of Morrisons two years ago, Mr Potts has stabilised the once struggling retailer by focusing on luring shoppers back to its stores by lowering prices, refurbishing shops and improving its food ranges with the addition of a premium “Best” line, the Telegraph reports.

“The most important thing is the recovery of our supermarkets but we have also been building a broader business,” said the Morrisons boss.

Most recently, the supermarket has been making the most of its British manufacturing facilities and supply chain by sealing wholesale deals with Amazon, petrol station group Rontec and most recently convenience chain McColls.

The grocer has said it expects to make £1bn of wholesale supply sales in due course. “We are not a one-club golfer,” said Mr Potts.

Morrisons has been focused on striking “capital light” supply deals, rather than engage in the convenience takeover frenzy sparked by Tesco’s £3.7bn swoop on Booker or the bidding contest between Sainsbury’s and Co-op for Nisa. “We said we would look at wholesale 18 months ago, before it became fashionable,” said Mr Potts in reference to the recent spate of dealmaking.

Morrisons pre-tax profits jumped to £200m in the six months to July 30, up from £143m in the same period of last year. Underlying profits, meanwhile, rose by 12.7 per cent to £177m, beating analyst forecasts.

 “Morrisons has quite simply been transformed over the past two years,” said John Ibbotston, director of retail consultancy Retail Vision. “Given the cut-throat market we are in, this has been one of the great retail turnarounds”, he added.

Like-for-like sales rose by 3 per cent over the half year, compared to a rise of 1.4 per cent in the previous year. However, some analysts focused on a slight drop in the number of items customers bought in the second quarter, indicating that people were already tightening their belts and buying only what they needed.

Morrisons said that it had “crunched” the price on more than 2,000 products during the half year as part of a discounting drive but admitted that shop prices had risen on some categories, such as butter and cream, as wholesale dairy prices have soared.

“We can’t defy gravity”, Mr Potts said. However, the supermarket boss said that it would be well-placed to be more competitive on price as its growing wholesale business would boost efficiencies within its supply chain “which should mean cheaper packs of bacon on the shelves”.