UK retailer Morrisons published its full-year results today, indicating a like-for-like sales increase of 1.7%; the first year since 2012 that the retailer has seen positive like-for-like growth. Here's how the analysts saw it:
Darren Shirley, Shore Capital
"It is difficult to our minds to identify a misplaced foot by Mr. Potts since he took the reins of a somewhat problem Morrisons in spring 2015. The transformation of the business has been remarkable, a joy to chronicle in fact, Mr. Potts is displaying exemplary leadership skills but also, it should be said, a high level of entrepreneurship. Whilst much has undoubtedly been achieved in what has predominately been a Fix phase, which is not yet complete we should add, there is a lot to still come through in a measured and controlled manner, reflecting Mr. Potts considered nature, to our
minds."
Bruno Monteyne, Bernstein Research
"Guidance into next year starts on a cautious note outlining 'uncertainties ahead' in food prices and increasing pension, depreciation and rates. However they remain confident of delivering on the £50-100m on incremental PBT. Management guide to further net debt reduction in 2017 to below £1 billion, for us, the question remains as to the use of excess cash going forward. Overall the results are solid, slightly beating expectations that had already been guided up in January, but we don't see any material new positive surprises."
Tom Berry, GlobalData
"The last year has seen UK grocers invest heavily in revenue streams outside of the day-to-day income from physical stores with Sainsbury’s purchase of Argos and Tesco’s merger with Booker highlighting the need for a diverse portfolio. Morrisons has been no exception with an expansion of its partnership with Ocado, a wholesale supply deal with Amazon, forecourt expansion with Rontec (40 new concessions by September) and growth of its Timpson instore services (sales up 40%). These moves are indicative of Potts’ plans to stabilise the company as it looks to invest the money from the final stages of M Local closures to build on a year of strong results."
Danielle Pinnington, Shoppercentric
“It seems Morrisons are reaping the benefits of putting the focus back on customers. As our own research showed at the beginning of the year, shoppers are looking for those retailers who deliver positive experiences instore. That means quality and service.”
Barclays European Food Retail Equity Research
"Overall, we think the 16/17 results are fine but less impressive than recent sets of figures. The lack of specific new targets and the several highlighted cost headwinds does not help visibility on a stock that continues to look expensive on most measures."
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
