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Retail

UK's Morrisons Core Earnings Up 6.5% On Improving Sales Trend

By Reuters
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UK's Morrisons Core Earnings Up 6.5% On Improving Sales Trend

British supermarket group Morrisons reported a 6.5% rise in core earnings for its 2022/23 year, helped by an improving trend in underlying sales which it said reflected sharper prices and the appeal of a new loyalty scheme.

Morrisons, owned since 2021 by US private equity group Clayton, Dubilier & Rice, said its core earnings, or underlying EBITDA, was £970 million (€1.1 billion) in the year to 29 October 2023.

Full-year total revenue, excluding fuel, increased 2.7% to £14.9 billion (€17.4 billion).

The group, led since November by former Carrefour France boss Rami Baitiéh, said fourth quarter like-for-like sales, ex fuel, were up 3.3%, a sixth straight quarter of improvement.

Performance 'Not Good Enough'

Baitiéh said that the British supermarket group's performance since the pandemic had not been good enough, and he will provide an update on strategy in March.

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"There are so many great strengths at Morrisons but I must also be very direct," he told reporters after the group published annual results.

"Since the pandemic, Morrisons has not been on peak form, our market share has slipped, slowly but consistently, our like-for-likes (sales), although on an improving and encouraging trend now, have been below the pack for a while, and the switching data has not been encouraging," he said.

"So although we have many structural, operational and cultural strengths, we must not be satisfied with our recent performance."

'Reinvigorate, Refresh And Strengthen'

Baitiéh stated that Morrisons is developing plans to “reinvigorate, refresh and strengthen Morrisons" and "start a new chapter – which begins with our customers.”

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“Across the business we are listening hard to what our customers are telling us and taking action, and we are just beginning to see our customer satisfaction scores improve. This will be the bedrock of our next chapter,” he said.

Jo Goff, CFO, added, “This has been a year of steady progress as we continued to invest in price, customer service, loyalty and made further improvements in our own brand range and in quality.”

Market Share

Morrisons is, however, losing UK grocery market share, ending 2023 with 8.8%, down 30 basis points on the year, according to researcher Kantar.

Kantar's data has shown Morrisons underperforming rivals, including market leader Tesco, No. 2 Sainsbury's and the German-owned discounters Aldi and Lidl.

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In 2022, Morrisons was overtaken as Britain's fourth-largest supermarket by market share by Aldi.

The retailer announced a deal to sell its petrol forecourts portfolio to Motor Fuel Group, which is also majority-owned by CD&R. Proceeds of about £2 billion will be used to pay down debt and invest in the business.

News by Reuters, additional reporting by ESM.

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