Morrisons Full-Year Results: What The Analysts Said

By Steve Wynne-Jones
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Morrisons Full-Year Results: What The Analysts Said

UK retailer Morrisons has posted a 2.7% increase in total revenue for full-year 2018, with like-for-like sales up 4.8%.

In a statement, chief executive David Potts noted that this is the Bradford-based retailer's third consecutive year of sales and profit growth, indicating the Morrisons turnaround is "well on track".

Here's how leading retail analysts viewed its performance:

Thomas Brereton, GlobalData

"With Brexit still looming over the retail sector in 2019, talks of supply shortages and impending lack of availability across UK grocery are rife. But Morrisons is better placed to withstand such pressures than its Big Four rivals, having successfully secured Authorised Economic Operator status during the year, on top on expanding its dependence on local suppliers (up 27% during 2018, and doubled over the past three years); in fact, in light of this significantly stronger foothold, it would be understandable if some of its management secretly have their fingers crossed for a no-deal situation."

Fiona Cincotta,

"Sagging consumer confidence hasn't knocked Morrisons's turnaround plan off track. Sales growth, despite slowing in the fourth quarter, still came in at a commendable 3.8%, indicating Morrisons is negotiating the tough trading environment better than most.


"A highlight is the 12 basis point improvement in underlying operating margin. There were fears heading into this result that Morrisons had to slash prices to keep luring customers but the margin growth indicates it hasn't hit the panic button, despite aggressive competition from German discounters. Wholesale is of course proving to be a strong contributor to Morrison's resurgence, with the McColls partnership humming along nicely. There's still plenty of room for growth in the wholesale division, should Morrisons execute its latest deals with MPK Garages and Big C in Thailand as smoothly."

Russ Mould, AJ Bell

“First things first these numbers from supermarket Morrisons show the excellent job chief executive Dave Potts is doing at the group.Revenue growth is the best seen in a decade and while statutory profit is hit by one-off items, the resilient cash flow performance delivered by the group is probably more relevant. After all it allows the company to deliver a healthy increase in dividends for shareholders.

"However, what Morrisons needs to continue to focus on, and reassuringly Potts references this in his comments accompanying the results, is delivering the best possible shopping experience for its customers. It sounds simple but, at a time when the retail sector and groceries face substantial upheaval, getting the basics right is more important than ever."

Catherine Shuttleworth, Savvy

“A growth story from Morrisons this morning - reporting like for like numbers of 1.5 percent in the core estate including The real success and growth driver is clearly the wholesale agreement with McColl and the ongoing sales driven by their relationship with Amazon. Not only are these two initiatives growing top line sales growth, but they are the levers of profit. Morrison’s are not immune to the continued pressures on consumer spending.


"Morrisons have much to be happy about, but there are concerns that their third growth lever, .com appears either to have slowed down or their store performance has significantly dropped. The changed dynamic in their relationship with Ocado with M&S now at the table is going to be a concern in the short to medium term.”

Clive Black, Shore Capital

"Morrisons has had another very good year in the big scheme of things in our view. First and foremost, it has continued to self-improve, customer satisfaction is up by 20% over four years, reflected in ongoing revenue and profit growth from its core supermarket business.

"Indeed, two-thirds of the profit growth in FY2019 came from its Retail operations, reflecting growth-on-growth as well as aforementioned investment in the broadening of the Group. Taking the notable increase in the Group’s depreciation charge into account, reflecting its prudent policies and the evolving mix of asset investment, cash profit growth has been especially strong since CY2015."

© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.

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