Morrisons’ interim results: past year’s challenges
Disappointing Christmas
Morrisons started the year by revealing it had not got what it wanted for Christmas the previous year, with like-for-like sales down by 5.6% for the six weeks to January 5 2014.
Total sales were down by 1.9% excluding fuel and by 3.3% when fuel was included.
Shore Capital analysts Clive Black and Darren Shirley said the results were a surprise and a disappointing trading update.
“Morrisons is under-performing because of fundamental issues with its brand, stores and offer,” they said. “To think otherwise is dangerous to our minds.”
Both argued Morrisons’ fresh formats strategy had alienated core customers without attracting new ones.
Assuming continued weak momentum into the first half and quarter of 2014/15 and negative operational gearing, Shore Capital cut its profit forecast by 14% from about £800M to £688M. But it offered hold advice on the retailer’s stock.
Panmure Gordon analyst Graham Jones agreed that the results were “very disappointing” but repeated a ‘sell’ advice on the retailer’s shares.
Dalton Philips, Morrisons’ ceo, said the sales environment continued to be very challenging, but the board expected full year underlying profit performance would be towards the bottom of the range (£783M– £853M) of current market expectations.