British supermarket group Morrisons reported a halving in annual profit as a COVID-19-related jump in sales was more than offset by the huge extra costs of the crisis.
The group said on Thursday it made profit before tax and exceptional items of £201 million ($280 million) in the year to 31 January, prior to a business rates payment of £230 million.
That compared to analysts' average forecast of £200 million and £408 million made in 2019-20.
Pandemic Costs
Morrisons, Britain's fourth biggest grocer by sales after market leader Tesco, Sainsbury's and Asda, said that while its like-for-like sales rose 8.6% over the year, it incurred direct pandemic costs of £290 million.
That reflected the cost of hiring tens of thousands of additional workers, staff sick pay and in-store measures to deal with the pandemic.
Morrisons also lost revenue from in-store cafes, which were forced to close, while demand for fuel has been subdued during the crisis.
In the group's new financial year costs and cash flow comparatives ease but those for sales get much harder.
Forecast
It forecast 2021/22 profit before tax and exceptionals including business rates paid to be higher than the £431 million profit achieved in 2020/21 excluding the waived rates relief.
Morrisons also expects strong free cash flow and a significant reduction in net debt.
Shares in Morrisons, which was last week relegated from the FTSE 100 index of top UK firms, closed Wednesday at 177 pence, valuing the business at £4.25 billion.
