Supermarket chain Morrisons is predicting a “challenging” year ahead for the economy with value again being priority for consumers.
Morrisons today unveiled its preliminary results for the year to January 31 that showed turnover up 6% at £15.4bn, like-for-like sales up 6% and pre-tax profits of £858m, compared to £655m in the previous year.
Sir Ian Gibson, Non-Executive Chairman, said: “Morrisons had another good year. Once again our focus on fresh food and great value appealed to shoppers everywhere, and we have successfully grown sales and profits to record levels.
“We completed delivery of the Optimisation Plan first launched four years ago, and we are well on the way to cementing our position as the ‘Food Specialist for Everyone’.
“The opening of 43 new stores in the year accelerated our journey from national to nationwide.
“We expect the economic environment to remain challenging, disposable incomes to be under pressure and value to remain a high priority for consumers.
“The Board believes that Morrisons’ unique offer of high quality, fresh food at great value prices will continue to attract customers from our competitors and drive market share growth in the year ahead.
“For the longer term, we will continue to utilise our balance sheet strength to invest for growth, with new space, new manufacturing capability and new systems priorities in the year ahead.
“Based on market research data from Kantar (formerly Taylor Nelson Sofres), we believe our grocery market share grew from 12.3% to 12.6% in the year, building on similar growth the year before.
“There is now much greater awareness of our brand throughout the country and as a result we grew sales well in all regions, particularly in the south and Scotland.
“Our market research showed that we continued to attract new customers from competitors, including both the premium grocery segment and the discounters.
“The group has made good progress in its plans to move from being a national presence to a truly nationwide retailer.
“During the year we opened 43 new stores and now have a total of 425 trading,
34 of these were acquired from the Co-operative Group and we also opened 11 other stores.
“Of these, two were replacements of existing stores. All our new stores are listed on our website. With a total of 667,000sq ft of new store space and a further 69,000sq ft from the 13 extensions completed during the year, we now operate 11.9msqe ft of selling space, an increase of 7%.
“In November 2008, we announced the acquisition of 38 stores from the Co-Operative Group and we opened 34 of these during the year. In the original package were four further stores which do not naturally fit the Morrisons operating model. As planned, they will remain closed until we are in a position to evaluate the results of other stores.
“Excluding these, the acquisition has enabled us to add 480,000sq ft of net new store space with final acquisition and development costs of £325m as projected.
“In addition we incurred £32m of one-off costs relating to pre-opening activities which has been included within operating profit. This was below our initial projection of £40m due to tight cost control and the timely manner in which the OFT approvals were granted.
“Although early days, we are pleased with the customer response to the new stores, many of which were community stores operating with a limited range and high prices under the Somerfield fascia.
“As Morrisons, these stores offer a full weekly shop, with a strong fresh offer, at the normal nationwide prices charged throughout our estate. Whilst these stores are smaller than our average, being below 20,000sq ft, we are confident that we can operate this size of store very successfully.
“There are now 96 such stores in our estate, and we expect that smaller store formats will form an important element of our ongoing new space acquisition strategy.
“The combination of our organic store opening programme and the Co-Operative/Somerfield acquisition has given us a great next step in our move from national to nationwide.”
