Morrisons to close 23 M Local stores as profit slumps
Morrisons has posted a 52% fall in full-year pre-tax profits as the supermarket revealed that it is to close 23 of its M Local convenience stores.
In the year to 1 February underlying profit before tax fell to £345 million from £719 million in the previous year. After taking into account property impairment of £1,273 million, the supermarket recorded a pre-tax loss of £792 million.
Like-for-like sales excluding fuel fell by 5.9% in the year and by 2.6% in the fourth quarter. Total turnover was £16.8 billion, down 4.9% year-on-year.
The struggling supermarket has recently announced the appointment of David Potts as its new chief executive who will take up his role on 16 March. Potts succeeds Dalton Philips who left the company last month after being at the helm for five years.
Morrisons chairman Andrew Higginson said: “Last year’s trading environment was tough, and we don’t expect any change this year. However, Morrisons is a strong, distinctive business – we own most of our supermarkets, have strong cash flow, and are famous with customers for great quality fresh food at low prices. This gives us a good platform.
“David Potts joins as chief executive next week. Under his leadership, we will focus on building trading momentum and being more like the Morrisons our customers expect.
“We will invest more into the proposition and put customers at the heart of everything we do. We will listen and respond to our customers, and work hard every day to improve the shopping trip.”
During the year, Morrison invested a net £315 million into its proposition, the majority of which was in price. This included the launch of the supermarket’s Match & More, price match and points card which provides a guarantee against Aldi and Lidl, as well as Tesco, Sainsbury’s and Asda. In February, the supermarket reduced the price of 130 high volume everyday lines by an average of 22%.
Morrisons said it is now it is aiming for almost £800 million more cost savings in the in 2015/16 and 2016/17 financial years, the majority of which it expects to invest back into the customer proposition.
Looking at the supermarket’s M Local convenience chain, Morrisons opened 57 stores and closed six underperforming stores during the year, bringing the total to 153. A further 23 underperforming stores will be closed during 2015/16 as the supermarket looks to slow its new openings and review the M local proposition and approach to site selection rather than pursue store number and turnover targets.
Higginson added: “Success measures will be simple – more customers buying more from us. More customers means more volume growth which, ultimately, will lead to better like-for-like, profitability and shareholder returns.”
