Morrison (Wm) Supermarkets (MRW) Ordinary 10p
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HL comment (9 May 2013)
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- Total sales (excl fuel) rose marginally 0.6% in the quarter.
- Group net debt increased to £2.3 billion (£2.18 billion - March) but was in line with management expectations.
- Recent industry surveys have shown Morrison lagging the sales growth of major rivals, partly due to its lack of an online offering, but also due to its limited convenience store business, as well as competition from discount retailers such as Aldi.
- The UK's number 4 supermarket said that sales at stores open over a year fell 1.8%, excluding fuel, in the reporting period to 5 May.
- The grocer has been slow in developing an online presence. Data shows online grocery sales in the UK will double to £11.1 billion and the convenience-store market will expand by 29% by 2017, according to the Institute for Grocery Distribution.
- Many of Britain's grocers are finding the going tough, despite their focus on essential goods, as consumers cut back on spending due to fears over job security, a squeeze on incomes and government cuts.
- Unlike some rivals, the group does not enjoy any degree of international diversity.
- Outlook comments remained cautious in tone, however full year expectations remained unchanged.
- Plans to launch its inaugural online food operation in January 2014 were progressing, said the group. Discussions with Ocado continue, and a further announcement is expected when Morrisons announces its interim results in September.
- The group said its tailored fresh food proposition was performing to plan and will span 40% of its estate by the end of the current financial year.
- Cost containment remained in focus. An IT system replacement programme was on track, and a £200 million reduction in capital expenditure was recorded in rephrasing new store investment.
- When announcing full year results in March, Morrisons reported that its first 12 M local convenience stores were "performing well" with an accelerated target established over the coming year. A West London convenience distribution centre (CDC) is open with a further centre earmarked to support North of England expansion.
- During the latest period, the company opened six stores, including two Morrisons M locals and acquired more than 80 stores to add to its convenience pipeline.
- The board adopts a progressive dividend policy that is currently yielding 3.8%.
All yield figures are variable and not guaranteed.