Morrisons today reported it is slashing its investment in new supermarkets and posted a 10% fall in pre-tax profits. Retail Week rounds up the City’s reaction.

“The key to this morning’s statement is the news that Morrisons will reduce its plans for large store openings, and cut the capital expenditure from over £1bn per annum to around £650m. Management has identified that most of its growth opportunities now come in convenience and online, so capex requirements are now lower.

“In many respects this is what the market has been hoping for from the UK food retailers from some time, but capex and the space race has always got in the way in the past.” – Jonathan Pritchard, Oriel Securities

“The extent to which peers respond to Morrisons’ space rationality remains a major swing factor. Still, the group is demonstrating a level of discipline currently absent in other quarters. The shares have rebounded strongly from the June lows, and this may cap near term gains.

“We look forward to evidence of further like-for-likes improvements as a future catalyst.” - James Grzinic, Jefferies

“As expected, the weak market share performance in the first half meant that Morrison’s have announced that first half profit before tax fell by 10% to £401m and although the under-pressure chief executive Dalton Phillips focuses on what the business is doing with online (via the tie-up with Ocado) and convenience store expansion to remedy the underperformance, the main interest today is likely to be in the financial review that announces a cutback in capex and space opening, whilst the comment that full year profits will be “broadly in line” with expectations implies a small downgrade.” – Nick Bubb, independent