In the week that chairman Sir Ken Morrison retired after 55 years, the UK’s fourth biggest grocer delivered a 66 per cent surge in pre-tax profits to£612 million, on sales up 6 per cent to£13 billion for the year to February 3.
Morrisons did not update on current trading, but is believed to have sustained its storming Christmas sales into 2008. Chief executive Marc Bolland said: “January was a good month.”
Sales at the 375-store chain climbed 11.3 per cent – more than double that of Tesco (5.4 per cent) and Sainsbury’s (5 per cent) – for the 12 weeks to January 27, according to TNS Worldpanel.
Bolland said it has grown “most strongly” in the South and attracted a growing number of younger and female customers. “We have been attracting a younger profile and they have shopped a full basket,” he said.
However, Bolland warned that consumer confidence is at its lowest since 1994 and he expected food price inflation to remain between 2 and 2.5 per cent.
Pali International’s Nick Bubb said that the latest results may be “as good as it gets” and that, on a price to earnings ratio of 20, Morrisons could be overvalued compared with rival Sainsbury’s.
Bubb said the retailer’s Market Street and Made in Store presentation and product appealed to shoppers, but warned that performance would be hard to maintain in 2008/2009 as rivals such as Tesco fight back.
Bernstein senior analyst Chris Hogbin also thought Morrisons faced a more competitive environment and warned of the potential risk from execution issues on its technology-led optimisation programme.
At last week’s Retail Week Awards, Morrisons was named Retailer of the Year and Sir Ken Morrison was honoured with the Outstanding Contribution to Retail award.
Although Morrison has retired as chairman, he will maintain his association with the retailer as honorary president.
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