Morrisons reports drop in profit

Supermarket giant Morrisons has reported a halving of third-quarter profits as it lost sales to the discounters and faced “unprecedented inflationary pressures” in its food manufacturing operations. 

The retailer, which was recently overtaken by Aldi as the UK’s fourth biggest supermarket chain by market share, saw its EBITDA fall from £356 million to £177m over the 13-week period to 31 July. 

Morrisons noted that “as a food maker, we feel the effects of inflation earlier than other retailers”. The group produces around half of its fresh food in-house, a much higher figure than other supermarkets. 

Excluding fuel, the grocer’s like-for-like sales fell 3.1 percent as more competitively priced chains tempted cash-strapped shoppers to their stores. However, Morrisons noted that the figure was an improvement on the 6.4 percent decline seen in the previous quarter, with an increase of 4.8 percent compared to before the pandemic.  

“It’s clear that the cost-of-living crisis is starting to change customer shopping patterns in many ways,” reports quoted Morrisons chief executive David Potts as saying. 

“The speed, scale and severity of cost and energy price increases, exacerbated by the terrible war in Ukraine, had significant impacts through the quarter, but the market is still growing, and the energy price guarantee will ease pressure on consumers.” 

In recent months, the business has been losing sales to the discounters and supermarket rivals as prices soared and shoppers looked for cheaper options. 

“We are doing everything we can to keep prices down for customers”, said Potts yesterday. 

“Importantly, we are adjusting and adapting, with ongoing investment in our customer proposition including exciting plans for McColl’s, which we’re confident will continue to grow our convenience offering and footprint. We are also improving our digital capabilities and investing strongly in our My Morrisons card and app, helping us to incentivise and reward our customers in a more personalised and targeted way.”