Morrisons delivered a rise in profits and revenues during its second quarter after it “bounced back strongly” from the cyber attack last year that impacted its trading ahead of the key Christmas trading period.
During the 13 weeks to 27th April, the group’s total sales rose 4.2% to £3.9bn, with like-for-like growth of 3.9% as it continued to benefit from the turnaround plan put in place by its Chief Executive, Rami Baitiéh. This helped drive underlying EBITDA for the whole half-year period up 7.2% to £344m.
Last week, key rival Tesco revealed that its UK like-for-like sales had risen 5.1% during the 13 weeks to 24th May, an improvement on the 4.3% rise in the previous quarter.
Morrisons highlighted the success of new initiatives. During the period, it commenced trials of several new projects in-store, including a new look Market Street format with Farm Shop influences and more added-value products; a new World Foods offer; and a tighter, sharper product range that is said to have introduced innovation and newness across its stores.
The group’s convenience unit also continued to expand, with 42 franchise stores opened in the quarter, bringing the total number of Morrisons Daily sites to over 1,700 – an increase of 120 year-on-year. It noted that it sees potential for hundreds more franchise-owned stores as it expands further in the convenience market.
Meanwhile, the group delivered a further £58m of cost savings, with its initial £700m target now exceeded. After its first quarter, Morrisons increased the target to £1bn by the end of its 2026 financial year.
Morrisons also revealed that it had agreed a partnership with a leading analytics company to “derive commercial insights” from its retail data.
“I’m pleased to report that Morrisons has bounced back strongly from the disruption of the Blue Yonder cyber attack in November 2024,” said Baitiéh, highlighting the progress the business has made with its renewal and modernisation programme.
“Against the backdrop of a challenging macro environment, with inflation driving subdued consumer sentiment, value remains at the forefront of customers’ minds. Throughout the first half, we’ve worked hard on helping customers through these challenges with a rigorous focus on price, promotions and meaningful rewards for loyalty.”
Jo Goff, Chief Financial Officer, added: “We’ve delivered a solid performance for Q2, reflecting the broad-based progress being made across the business. LFL sales strengthened in the period, in what was our tenth consecutive quarter of LFL growth, with positive contributions from across the business supporting growth in underlying EBITDA and a robust cash performance.
“In addition, we are successfully delivering further cost savings to enable us to continue to offset cost headwinds. Having delivered over £700m, our target has now been increased to £1bn, with the remaining savings to be delivered over the next 18 months.”
NAM Implications:
- Morrisons appears to be delivering on its turnaround plan in terms of revenue and innovation.
- Along with a deeper penetration of the convenience sector via low-cost franchising.
- All that remains for suppliers is ensuring they are achieving and maintaining their fair share of sales and investment.
- Then hope for the best…
