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UK's Morrisons Says Talk Of Firm As Takeover Target "Pure Speculation"

Published on Sep 12 2019 8:20 AM in Retail tagged: Featured Post / UK / Morrisons / Grocery / takeover / World News

UK's Morrisons Says Talk Of Firm As Takeover Target

Suggestions that Morrisons, Britain's No. 4 grocer, could be subject to a takeover bid is "pure speculation", its chief executive David Potts said on Thursday.

Industry analysts have suggested that Morrisons could be a candidate for a potential takeover, possibly from an overseas private equity firm, given the weakness of the pound making deals cheaper and the group's 27% share price fall over the last year.

Sales Performance

Morrisons reported its first fall in quarterly underlying sales since 2016 on Thursday, partly reflecting a tough comparison with last year when it was boosted by a hot summer.

The company, however, said it had maintained momentum in its turnaround plan and had seen "robust progress" in sales and profit, with the latter rising 5.3% in its first half.

For the six months to Aug. 4, the Bradford, northern England, based company made an pretax profit before one-off items of £198 million (€221.7 million). That compared to analysts' average forecast of £192 million and £188 million made in the same period last year.

Like-For-Like Sales

Group like-for-like sales, excluding fuel and VAT sales tax, fell 1.9% in its second quarter, having increased 2.3% in the first quarter. Analysts had on average forecast a 2.0% fall.

Second-quarter trading had faced tough comparisons with a year earlier, when sales were boosted by the hot weather, a royal wedding and the soccer World Cup. The fall followed 14 straight quarters of growth.

Morrisons, however, said it expected retail like-for-like sales to improve in the second half.

The retailer said it was extending its partnership in Britain with online giant Amazon by signing a multi-year agreement rather than the current rolling contract.

Shares in Morrisons, which trails market leader Tesco , Sainsbury's and Walmart's Asda in annual sales, have fallen 27% over the last year as its sales growth has slowed. They closed Wednesday at 194 pence, valuing the business at £4.66 billion (€5.22 billion).

It will pay a special dividend of 2 pence a share, taking its interim payout to 3.93 pence a share.

Prior to Thursday's update analysts were on average forecasting a full year 2018-19 pretax profit of £415 million, up from £396 million in 2017-18.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

 

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