UK retailer Morrisons is continuing its turnaround under chief executive David Potts, as it posted a 1.2% increase in turnover to £16.3 billion for full year 2016, despite closing a number of stores last year.
Like-for-like sales (excluding fuel and VAT) were up 1.7%, with positive sales recorded in all four quarters (+2.5% in Q4). Underlying profit before tax was up 11.6% to £337 million.
Morrisons said that this was the first year of positive like-for-like sales and underlying profit before tax growth that it has recorded since 2011/12, with ‘strong cash flow, [and] gross and net debt down substantially’. Net debt is expected to fall to less than £1 billion by the end of 2017/18.
The retailer said that it has achieved approximately £1 billion worth of cost savings, with ‘further productivity and cost savings to come’, a sign that the Bradford-based operation is now a leaner, more effective operator.
“Our full year of like-for-like sales and profit growth was powered by listening to customers, and shows what our hard-working team of food makers and shopkeepers can do,” said David Potts, chief executive.
“But, it’s only one year. Our turnaround has just started, and we have more plans and important work ahead. If we keep improving the customer shopping trip, I am confident that Morrisons will continue to grow.”
The retailer said that it was ‘confident we can continue to turnaround and grow Morrisons’, despite the uncertainties over imported food prices as a result of a devlaued Sterling.
However, it added that it has ‘identified further cost saving opportunities beyond the £1bn already achieved, in: ordering, distribution between Manufacturing and Retail, in-store administration, and procurement of goods not for resale’.
Commenting on its performance, Barclays European Food Retail Equity Research said, “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.