Morrisons Posts 9% First Half Profit Following Strong Summer
Morrisons, Britain's fourth biggest grocer, beat forecasts with a 9% rise in first half profit, and said it would pay a special dividend, helped by strong growth on the back of warmer than usual summer weather and the soccer World Cup.
The supermarket chain, which will move into the no.3 spot should a deal between bigger rivals Sainsbury's and Asda go ahead, said sales were also boosted by moves to broaden its business into wholesale, where it has relationships with the McColl's convenience chain and Amazon .
In its second quarter group like-for-like sales, excluding fuel and VAT sales tax, rose 6.3% - a nine-year high, having risen 3.6% in the first quarter.
Chief Executive David Potts said second quarter sales were helped by Britain's record-breaking summer heatwave, the soccer World Cup and the Royal Wedding as well as the firm's own initiatives.
Potts, a former Tesco executive, joined Morrisons in 2015 to lead a recovery after it was badly damaged by the rise of discounters Aldi and Lidl in its northern heartland and the strategic errors of previous management.
He is broadening Morrisons' business by improving the performance of its nearly 500 UK stores while also pursuing growth in online and wholesale markets.
He has overseen a steady improvement in trading, driven by more competitive prices, improved product ranges and availability as well as better customer service in refurbished stores.
Potts has also overhauled Morrisons' online strategy through a renegotiated agreement with distributor Ocado and struck wholesale supply deals with Amazon and the McColl's convenience business.
Since the half-year end the group has agreed new wholesale deals to supply MPK Garages forecourt stores and Big C in Thailand.
It said £700 million of annualised wholesale supply sales were now expected to be achieved ahead of initial end-2018 guidance, with £1 billion of annualised sales still expected in due course.
"We are confident that Morrisons has many meaningful and sustainable sales and profit growth opportunities ahead," said Potts.