Morrisons warns of hit from Ukraine crisis, inflation

Morrisons, Britain’s fourth-biggest grocer and a major food producer, on Monday warned its sales and core profit for the year could be hit by the crisis in Ukraine and rising inflation unless conditions improve.

The supermarket group, which was acquired last year by private equity firm Clayton, Dubilier & Rice, said the Russia-Ukraine conflict and rising inflation had impacted consumer spending, and in turn the group’s sales and core profit, since the beginning of February.

“We are taking steps to mitigate the impact of these developments on our EBITDA (core earnings) for the remainder of the year,” it said in a results statement.

“Unless these conditions improve, the impact of these developments could have a material adverse effect on our sales and EBITDA for the year.”

Morrisons, which started out as an egg and butter merchant in 1899, trails market leader Tesco, Sainsbury’s and Asda in annual revenue.

It produces more of the food in store than its rivals do, and is the only major supermarket with its own abattoir and meat processing operations.

Consumer confidence in Britain has been hit by worries about galloping inflation, higher interest rates and the war in Ukraine, a survey showed last month.

The price inflation rate is heading for 9% later this year, according to the government’s budget watchdog, which predicted living standards in 2022 would fall by the most since at least the 1950s.

Morrisons reported adjusted core earnings of £941 million for the year to Jan. 30, 2022.