Morrisons’ profits plummet, as boss underlines faith in manufacturing

Like-for-like (LFL) sales fell by 2.7%, excluding fuel and VAT, in the six months to August 2 and were 2.4% down in the second quarter.

Total turnover dropped by 5.1% to £8.1bn, while underlying profit before tax was down by 35% to £117M.

The retailer also revealed plans to close 11 stores, putting at risk the future of 900 jobs.

Potts regretted the “difficult decision”​ to propose 11 unnamed store closures but said their lack of viability justified the decision.

In-house food manufacturing​

Meanwhile, Potts reaffirmed his faith in the retailer’s commitment to in-house food manufacturing, saying it offered an essential service to customers.

“Half of the food we sell is fresh and half of that food is manufactured by ourselves,”​ Potts told BBC Radio 4’s Today​ programme. “Whether it is in the manufacturing businesses we wholly own, or in our own stores – we make our bread from scratch and our British burgers from scratch in store.”​

Potts said food manufacture was a key point of difference between Morrisons and the other big four supermarkets – Tesco, Sainsbury and Asda – and the limited range discount stores Aldi and Lidl.

“Our staff really do bring these features to life,” ​​he continued. “Our customers do talk about that.”​

‘Turnaround will take time’​

In the commentary accompanying the results, Potts claimed customers and colleagues were beginning to notice improvements, “but the turnaround will take time and require sustained investment in the proposition”,​ he added.

Turning to Morrisons' £25M cash sale​ of its 140 M local convenience stores announced on Wednesday (September 9), Potts admitted that the retailer had arrived in that part of the convenience channel “quite late”.​ He said: “Despite the best efforts of the company, we were unable to scale the business at this time.”​

Meanwhile, read analysts' reaction to the results here​.