# Morrisons Execution strong and profitability robust

- Link: https://www.directorstalkinterviews.com/morrisons-execution-strong-and-profitability-robust/412802023
- Published: 2020-01-07T07:37:29+00:00
- Author: Amilia Stone

**WM Morrison Supermarkets** (LON:MRW) has today announced its trading update for
the 22 weeks to 5 January.

For the first 22 weeks of H2 to 5 January, Group like-for-like^(*) (LFL) sales excluding
fuel were down 1.7%, comprising contributions from retail of (1.7)% and wholesale
of 0.0%. Group LFL including fuel was down 2.8%. Total sales^(*) were down 1.8% 
excluding fuel (down 2.9% including fuel).

For Q3 (the period 5 August to 3 November), LFL excluding fuel was down 1.2%, comprising
contributions from retail of (1.1)% and wholesale of (0.1)%. Group LFL including
fuel was down 2.5%. Total sales were down 1.3% excluding fuel (down 2.6% including
fuel).

Throughout the period, trading conditions remained challenging and the customer 
uncertainty of the last year was sustained. We kept focussed on our priorities and
our customers, and continued to invest in the Morrisons price list while managing
costs well. Our basket of key Christmas items was once again very competitive, with
most prices the same as or lower than last year. In fuel, our business was affected
by a highly promotional market.

In wholesale we were pleased to grow sales with most of our customers, but overall
LFL growth was impacted by the lower total sales at McColl’s, as previously reported
by McColl’s for the period up to 24 November. Sales at the first ten conversions
from McColl’s to Morrisons Daily convenience stores are strong, and together we 
plan to extend the trial to another c.20 stores during January and February to further
tailor and test the proposition as we begin to transition McColl’s remaining ex-
Co-op stores to Morrisons wholesale supply. 

Following an extensive tender process, we recently sold our Camden store and eight
acre surrounding site to Berkeley Group for a total consideration of £120m. Berkeley
will pay £85m in stages over the years of the project, and will build a new Morrisons
supermarket and convenience store on the site at a cost to Berkeley of around £35m.

Also during the period, we opened four new stores (including two replacements), 
closed four underperforming stores, and launched another 25 Fresh Look stores bringing
the total to 44 this year. The new stores include Canning Town, which is our first
store with a Market Kitchen food-to-go offer, and Bolsover, our first smaller, community
store format. At Bolsover, we also passed the milestone of 1,000 new, local products,
which we have sourced from 27 local food maker events across Britain in just the
last three years.

Morrisons quality was once again widely recognised. We won Best Fizz for our Best
Prosecco in the Good Housekeeping Christmas Taste Test; our Best All Butter Mince
Pies, Best Classic Panettone and vegan Best Layered Tart all won their categories
at the BBC Good Food Christmas Taste Test; and we won 97 awards at the International
Wine Challenge 2020. In addition, our Free From brand continued its multi-year growth,
with sales up another 34% over Christmas and New Year.

**Outlook:**

We managed costs well throughout the period, offsetting some of the impact on LFL
sales of the challenging trading conditions and continued uncertainty amongst customers.
With four weeks of the year still to go, we expect 2019/20 profit before tax and
exceptionals to be within the current range of analysts’ forecasts.

> **David Potts, Chief Executive WM Morrison Supermarkets, said:**
> “It was encouraging that during an unusually challenging period for sales, our
> execution was strong and our profitability robust, demonstrating the broad-based
> progress we have made during the turnaround. This was again down to the hard work
> of Morrisons exceptional team of food makers and shopkeepers. As always, we will
> take some learnings into the new year, and look forward to 2020 with a strong 
> plan and solid foundations on which to continue to grow.”

_This announcement includes inside information._

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