Morrisons report steady progress in H1 report

Half-year trading results for Morrisons showed “steady progress” despite a challenging trading environment and a 0.9% reduction in like-for-like (LFL) sales.

The supermarket chain saw turnover rise by 2.3% to £8.9bn in the 26 weeks to 29 July, as well as a 1% rise in underlying profit.

According to non-executive chairman Sir Ian Gibson, commodity inflation is having an effect on customer confidence. He said: “Market conditions are becoming ever more challenging; we have had to work even harder for our customers during the first half. Against this backdrop, Morrisons has increased sales and underlying earnings and delivered good dividend growth.”

An increase in grocery store space in the UK is beyond historic levels of growth, which has come at a time of subdued market growth, said the report. The imbalance has also had an impact on an LFL sales increase in the grocery sector.

Trading of branded foods has also declined and customers are buying “into own brand supermarket products”, as well as spending more time looking for better deals and best value.

A 2013 outlook predicted more pressure on customers to shop economically. However, Morrisons expects to meet its goals in 2013. Chief executive Dalton Phillips said: “Although the sustained pressure on consumer spending was reflected in our LFL sales performance, we have made further good progress against our strategic objectives ­— the building blocks that are the foundations of the future success of our business.”

Phillips also explained that the Fresh Formats concept will be in more than 100 stores in 2013 and the launch of convenience stores in London will also add to sales. Further progress in 2013 is also expected, as the company’s new distribution centre is in operation and food production capabilities have also been extended.

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