Britain’s fourth biggest supermarket continued its turnaround under chief executive David Potts, the former Tesco executive brought in two years ago to revive flagging sales, with an 11.6 per cent rise in underlying pre-tax profit to £337million.
Sales at stores open for at least a year were up 1.7 per cent, surging to 2.5 per cent growth in the fourth quarter, as Morrisons drew 4 per cent more customers.
The retailer is broadening its appeal without any heavy investment through partnerships with Amazon, Ocado, key-cutter Timpson and petrol forecourt operator Rontec.
An automated ordering system forecasting stock requirements has improved product availability, while local choice options such as Scottish ales and butter had proved popular.
Potts said: “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.”
Morrisons shares fell 16¼p to 230¾p as Potts flagged “some uncertainties” around the impact on imported food prices from a weak pound.
It has identified opportunities for further cost savings above the £1billion already achieved, in areas such as ordering and distribution.
Potts said Morrisons had cut 800 prices in January and sought to play down fears that shoppers would bear the brunt of higher costs.
He added: “Price is crucial. There is no alternative other than to be more competitive. We are not as big as others in general merchandise [clothing], which report in dollars, so while we are not immune, we can be on the front foot.”
John Ibbotson, director of consultancy Retail Vision, said Morrisons had been transformed over the past two years “from a rudderless ship to a modern-day grocer with a sense of direction”.
He added: “Morrisons has regained shoppers’ trust. Potts has simply returned Morrisons to its roots of low prices, good value and fresh food. It’s a back-to-basics approach that’s worked.”
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