Retailer Results / Morrisons



Trading Update
Half year to 31 July 2016

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Trading Update
13 weeks to 1 May 2016


• Group LFL exc fuel: +0.7 per cent
• Group LFL inc fuel: +1.2 per cent

• LFL items per basket (y/y): -2.8 per cent
• LFL number of transactions (y/y): +3.1 per cent

Excludes online and convenience


In the 13 weeks to 1 May, like-for-like (LFL) sales excluding fuel were up 0.7 per cent (up 1.2 per cent including fuel). Total sales excluding fuel were down 1.8 per cent (down 0.9 per cent including fuel), reflecting the impact of supermarket closures and exit of the M local chain. Online contributed 1.0 per cent to LFL during the period. Fuel LFL was positive despite deflation of almost 11 per cent.

LFL transactions were up 3.1 per cent in the quarter and LFL volume growth was again strong. Deflation was 2.6 per cent, as softer factory gate prices flow through the supply chain and Morrisons invest in remaining competitive for customers.

Transaction growth was in part driven by a significant increase in sales of Food to Go (up over 17 per cent year-on-year). In addition, new self-scan and express checkouts continue to help customers shop more frequently. These factors also continue to impact items per basket (down 2.8 per cent).

David Potts, Chief Executive, said: “We are encouraged by progress across our six priorities. There is still much to do and our colleagues are working very hard to improve the shopping trip and save customers every penny we can. Customers are responding and satisfaction levels remain ahead of last year. We are of course pleased with a second consecutive quarter of positive LFL sales, which demonstrates our aim to stabilise trade is taking effect."



Full Year Results
Preliminary results – Year to 31 January 2016


• Like-for-like sales (LFL) ex-fuel/ex-VAT down 2.0 per cent
• LFL improved in H2, with Q4 LFL up 0.1 per cent despite deflation of over 3 per cent
• Total turnover down 4.1 per cent to £16.1bn (2014/15: £16.8bn)
• Underlying profit before tax (UPBT) pre-closure and restructuring costs of £302m (2014/15: £413m), at the mid-point of the £295m-£310m guided range
• Underlying PBT of £242m (2014/15: £345m)
• Underlying earnings per share (EPS) of 7.8p (2014/15: 10.9p)
• Profit before tax (PBT) of £217m (2014/15: loss of £792m)
• Free cash flow pre-dividend of £854m (2014/15: £785m)
• Generated £257m of cash, post-dividend and pre-property disposals
• Operating working capital improvement of £348m
• Property disposal proceeds of £300m, profit of £131m achieved
• Net debt reduced by £594m, to £1,746m


Total turnover during the period was £16.1bn, down 4.1 per cent year-on-year. Store turnover of £12.8bn, excluding fuel, was down by 1.4 per cent, comprising LFL down 2.0 per cent (including a positive contribution of 1.0 per cent from online) and 0.6 per cent from new space.

Fuel sales fell by 12.6 per cent to £3.1bn, with deflation a key feature. Towards the end of the year Morrisons led the market lower on fuel prices, and volumes responded. In Q4, despite deflation of nearly 20 per cent, fuel LFL was almost flat.

Sales improved through the year. In the second half ex-fuel LFL was down 1.3 per cent, an improvement on the first half (down 2.7 per cent). For Q4, LFL was up 0.1 per cent, despite deflation of over 3 per cent, and LFL Number of Transactions was up 1.6 per cent.

Underlying operating profit was £339m, with operating margin down 53bps year-on-year to 2.1 per cent. This excludes impairment and provision for onerous contracts, property disposal profits, loss on disposal of 140 M local stores, and the one-off set-up cost of the defined contribution pension scheme.

David Potts, Chief Executive, said: "By improving the shopping trip for customers, we have started the journey to turnaround the business and make our supermarkets strong. Our listening programme is informing and shaping the six priorities that are now driving the improvements that customers are noticing.

"Our strong balance sheet and cash flow provide the platform for turnaround and growth, but what makes us truly unique as food maker and shopkeeper is the personality and dedication of our thousands of colleagues. I am confident these strengths will help us fix, rebuild and grow Morrisons."



Trading Update
9 weeks to 3 January 2016


• Group LFL (ex-fuel) +0.2 (-3.3 per cent 2014/15)
• Group LFL (inc-fuel) -0.6 per cent (-5.1 per cent 2014/15)
• LFL items per basket -3.6 per cent
• LFL number of transactions +1.3 per cent


The latest update from Morrisons is stronger than expected with like-for-like sales excluding fuel up 0.2 per cent (down 0.6 per cent including fuel) and total sales excluding fuel down 1.2 per cent (down 1.7 per cent including fuel) in the nine weeks to 3 January. There was a strong performance in premium products and a successful category reset in Beers, Wines and Spirits.

It would appear that customers shopped more freely with the number of transactions up 1.3 per cent year-on-year in core supermarkets – like for like. In addition, online sales grew nearly 100 per cent year-on-year.

Deflation, excluding fuel, was 3.2 per cent, and c.7 per cent on a two year basis, deeper than rates suggested by the BRC and ONS.

Sales contribution from net new space was negative as expected (-1.4 per cent), following the recent disposal of 140 M local stores and previously announced supermarket closures.

Around 800 head office roles have been removed since the start of 2015/16.

David Potts, Chief Executive, said: "We are pleased with our improved trading performance over the Christmas period. While there is of course much more to do, we are making important progress in improving all aspects of the shopping trip, and our customers tell us they are pleased with the changes. In addition, we have made further progress in debt reduction, and our financial position is strong and getting stronger."

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