Morrisons has reported a slump in profits at the half-year mark as chair Andrew Higginson said the business had weathered a “variety of continuing challenges”, including supply chain disruption and driver shortages.

Morrisons recorded a 37.1% drop in pre-tax profit to £105m in the half-year to August 1, which the grocer attributed to £41m of Covid-19 related costs and £80m of lost profits across its café, fuel and food-to-go divisions. 

The grocer said its profits were also impacted as it absorbed costs related to “rising commodity prices and freight inflation, plus a shortage of HGV drivers across the UK”.

Morrisons total revenue including fuel rose 3.7% to £9bn during the period, while like-for-likes excluding fuel edged down 0.3% and online sales surged 48%.

Across the grocer’s second quarter, like-for-like sales were down 3.7% overall, with its retail arm down 4.6%, although on a two-year basis like-for-likes excluding fuel were up 8.4%.

Morrisons, which confirmed yesterday that it would hold an auction between rival bidders Fortress and CD&R to secure a definitive frontrunner to take over the business, reported “significant acceleration” of its Morrisons Daily convenience store format during the period.

The supermarket giant is now on track to convert 350 McColl’s stores to the format by next November, ahead of the previous target of 300 by the end of 2022. 

Morrisons said that, despite ongoing challenges, it still expected its full-year profits to be up year on year and that second-half profits were “expected to be considerably higher than the £105m achieved in the first half”.

Higginson said: “Across the business, the whole Morrisons team has shown commendable resilience facing into a variety of continuing challenges during the first half, including the ongoing pandemic, disruption at some of our partner suppliers and the impact on our supply chain of HGV driver shortages.

“As we approach our busiest time of year, I’m confident the team will continue to rise to all challenges and keep up all the good work to improve the shopping trip for customers.” 

  • Get the latest grocery news and analysis straight to your inbox – sign up for our weekly newsletter