However, the retailer told investors it was unable to give any guidance on its projected profitability for the year. Morrisons is still dogged heavily by the conversion of Safeway stores acquired last March. The retailer said like-for-like sales at core Morrisons stores were down 2.3 per cent, excluding fuel, because of competition from divested stores and cannibalisation from Safeway conversions. The stores also suffered from strong comparable sales last year.
The retailer said that the 108 converted Safeway stores were performing strongly, with total sales up 12.5 per cent on last year and a 21.3 per cent increase in customer numbers. Morrisons said it was on track to have 230 converted sites by November.
The statement, made as the retailer prepared to hold its annual general meeting this morning, included news on the appointment of Richard Pennycook as group finance director, with effect from October 1. In a move that will surely be seen as an attempt to appease shareholders angered by four profit warnings in the last ten months Sir Ken Morrison has stepped down from the day-to-day running of the company. Chief executive Bob Stott will now play a greater role in running the company. Morrisons deputy chairman David Jones has been given the task of finding a further four non-executive directors.
However, Jones acknowledged that the retailer had a tough year ahead. He said: '2005/2006 is proving to be a challenging year. However by the end of November we will have converted all the ongoing stores to the Morrisons format, which will allow the elimination of double running costs and provide opportunities to achieve additional economies of scale.'
Log on for a more in-depth report on Morrisons' trading statement later today.