13 Mar 2008


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Morrisons reports record results as Sir Ken bows out

Morrisons

Marc Bolland

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Morrisons has reported like-for-like sales (excluding fuel) up by 4.6% for the year to 3 February, on sales up 6% to £13bn.

And pre-tax profit soared to £612m, up from £369m in 2006-07.

Outgoing chairman Sir Ken Morrison said: “In my last statement as chairman of Morrisons it gives me particular pleasure to be reporting record earnings.”

Marc Bolland, chief executive, said “This has been a strong year for Morrisons, with growing customer numbers. We have always delivered good availability and service. Now we are also recognised for our great fresh foods.

“Customer numbers have grown by an extra half million per week and we are well on track to becoming the 'food specialist for everyone'.”

Over the year, Morrisons said:

• It had expanded and revitalised its range
• Its store refurbishment programme was on track to complete in July 2008
• Customer numbers had increased “significantly” in the final quarter
• Eight new stores had opened

Sir Ken said the profit improvement seen over the year would provide a profit share pool for staff of £30m.

He added: “The year under review saw the rise of inflationary cost pressures in a number of basic commodities such as dairy products and wheat. We fought hard to avoid passing these higher costs onto consumers, and we will continue to strive to operate at low cost in order to ensure maximum value for our customers.”

On the Competition Commission's inquiry into the grocery sector, he commented: “We see nothing in the provisional findings that would cause us to change the way we do business – whether providing value and choice to customers, dealing fairly with suppliers or seeking out new sites.

“We are encouraged that a competition test, as proposed, would afford opportunities for us in areas of the country where we are under-represented.”

Sir Ken also re-iterated Morrissons' commitment to ownership of freehold property.

Bolland announced that surplus capital of £1bn could be returned to shareholders in 2008 and 2009 through a share buyback programme, £500m of which would come in the first 12 months.

He added that the year had been a strong one for Morrissons: “We delivered good progress on our long-term plans and continued the profit recovery momentum of the previous year.”

Bolland said the group was pleased with the initial progress of its smaller-format (25,000sq ft) store in Erskine, opened last year, and would be looking for more such sites.

Morrisons ended the year with 375 stores and 10,835,000sq ft of retail space, up by 3% on the previous year.

Bolland said sales growth had been broad-based, across all regions, although the strongest growth came in Scotland and the South of England.

Health and beauty departments showed growth, but not as much as the supermarket had hoped for. A new revised format is now being trialled.

Bolland added: “We continued to see strong trends towards customers choosing higher quality, more healthy food – with sales of our Eat Smart range up 35%, the Best up 25% and Organics up 14%.”

He said store labour productivity had increased by 6%, following a 14% uplift last year.

Distribution costs per case delivered to stores reduced by 9.4% year on year.

The cost of revamps was less than £500,000 per store, Bolland revealed, adding that the new design had been well received by customers.

Morrisons has agreed terms for a new distribution centre in Sittingbourne, Kent, which should open in 2010.

Bolland said that the tough economic climate presented an opportunity for Morrisons because it was able to offer “great value” to customers.

The group expects to open a further eight stores and extend 19 in the coming year.

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