Surge in profits for Morrisons as turnaround plan bears fruit

Underlying earnings per share increased by 39.8 per cent to 10.86p from 7.77p.

In results for the year to 29 January 2017, like-for-like sales excluding fuel Value-Added Tax were up 1.7 per cent, after a positive performance in all four quarters, helping to drive turnover up 1.2 per cent to £16.3bn despite store closures.

Total turnover was 16.3 billion pounds, up 1.2% year-on-year despite negative net new space as a result of the planned programme of disposals and underperforming store closures.

Morrisons closed eight stores and opened one new store during the year as part of the group's overhaul.

Food prices are beginning to rise on supermarket shelves as producers begin to pass on soaring import costs triggered by the Brexit-hit pound.

The supermarket chain said pretax profit in the year ended January 29 grew to GBP325.0 million from GBP217.0 million the year before, as revenue rose to GBP16.32 billion from GBP16.12 billion.

Morrisons warned, though, of "uncertainties" ahead, particularly of price rises of imported food if sterling stays at lower levels.

Morrisons also expects depreciation and pension costs to increase by 20-30 million pounds and 20 million pounds respectively in the 2017-18 year, and also faces higher staff costs.

Its statement said: "We have identified future cost savings beyond the original £1bn".

Chief executive David Potts, however, cautioned that the group's turnaround had "just started".

Morrisons said it had a plan in place to help mitigate those, raising the prospect of possible redundancies.

He has delivered a steady improvement in trading, helped by more competitive prices, improved product ranges and availability and better customer service, resulting in a 22 percent rise in the firm's shares over the previous year.

  • Zachary Reyes