Supermarket giant Morrisons has revealed a 35% drop in pre-tax profits over its first half and plans to close 11 more stores, with up to 900 jobs under threat.
- First-half underlying pre-tax profits fall 35%
- H1 like-for-likes slip 2.7%
- Plans to close 11 more stores
- Closures to result in up to 900 job losses
- Boss David Potts reveals six-point turnaround plan
The struggling grocer reported that underlying pre-tax profits in the six months to August, including restructuring costs, were £117m. Like-for-likes, excluding fuel and VAT, in the period fell 2.7%. Total sales slipped 5.1% to £8.1bn. In Q2, like-for-likes fell 2.4%.
Chief executive David Potts is attempting to revive the business, but admitted today: “It will be a long journey.”
He added: “The immediate priority is to deliver a better shopping trip to stabilise trading performance.” He claimed customers and staff are “beginning to notice improvements”.
He also revealed details today of a six-point turnaround plan. His priorities are: to be more competitive; to serve customers better; find local solutions; develop popular and useful services; to simplify and speed up the organisation; to make the core supermarkets strong again.
Potts is assembling his own streamlined leadership team and a host of senior staff have left the grocer since he took charge.
Morrisons also revealed that the closure of 11 more stores will mean a “restructuring” cost of £20m. It could mean up to 900 job losses.
It comes a day after the group confirmed it had sold its M Local convenience business, resulting in a loss of £30m. However, it said today: “Convenience remains an important growth channel, and we will continue to consider capital-light, returns-enhancing opportunities in the future.”
Morrisons said it expects food deflation to continue, despite some commentators predicting food price inflation to return.
Looking ahead, the grocer predicted its underlying pre-tax profits to be higher in the second half than the first, but did not give more detail.