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Morrison (Wm) Supermarkets (MRW) Ordinary 10p

Sell:240.00p Buy:240.10p 0 Change: 1.10p (0.46%)
FTSE 100:0.14%
Market closed Prices as at close on 20 January 2017 Prices delayed by at least 15 minutes | Switch to live prices |
Sell:240.00p
Buy:240.10p
Change: 1.10p (0.46%)
Deal now Deal for just £11.95 per trade in a ISA, SIPP or Fund & Share Account
Market closed Prices as at close on 20 January 2017 Prices delayed by at least 15 minutes | Switch to live prices |
Sell:240.00p
Buy:240.10p
Change: 1.10p (0.46%)
Market closed Prices as at close on 20 January 2017 Prices delayed by at least 15 minutes | Switch to live prices |
Deal now Deal for just £11.95 per trade in a ISA, SIPP or Fund & Share Account
* Please note that there can be occasions when the Selling price shown may be temporarily higher than the Buying price. This can sometimes happen when the stock market is closed but it can also happen at other times for a variety of reasons. However, when the stock market is open and you place a trade, the selling price available to you will never be higher than the buying price. Live prices will be available when you place a deal with us during market hours. Please check these and contact us if you are unable to deal online.

HL comment (10 January 2017)

Best Christmas for seven years

On a like-for-like basis, Christmas sales are the strongest the company has seen for seven years. As a result, the group is now expecting underlying profit before tax for the year to come in at £330-340m, ahead of analyst consensus. The shares jumped by over 4% on the news.

Our View

Morrison may still be a work in progress, but that progress looks increasingly rapid. CEO David Potts' strategic plans for the group make perfect sense; focus on the consumer, reinvest in pricing and improve the stores' appeal. The strategy seems to be working too. Customers are coming back, and like-for like sales are now firmly back in positive territory.

Finance costs are falling as debts are repaid, and with 85% of stores under freeholds Morrison has low rental obligations. This gives the group strong cash flow, and helps to support the dividend. The shares currently offer a prospective yield of 2.5% (not a reliable indicator of future income) for its next financial year, and analysts are expecting the payout to increase in the coming years.

With billions of pounds of sales and attractive cash generation, Morrison certainly has potential. However, it still faces many challenges, not least the absence of a convenience offer of any scale and an under-representation online.

The fall in sterling after the referendum has complicated matters too. With the cost of imported goods rising, relationships all the way down the chain from producer to consumer are at risk of disruption. While it will want to keep prices low, the group now has little room for manoeuvre if suppliers refuse to take the hit. Profit margins, at just 2.1% last year, are already less than half of what they were in 2012.

Christmas trading in detail:

Despite the continuing impact of store closures, total sales rose 2.0% excluding fuel (4.0% inc. fuel) in the nine weeks to 1 January 2017.

Excluding fuel, like-for-like (LFL) sales excluding fuel rose 2.9% (4.7% inc. fuel), helped by strong growth in transaction numbers, up 5.2% year-on-year during the period.

Within the stores, fresh categories such as Fruit & Veg, together with Beers, Wines & Spirits, the more premium 'Best' offering and Nutmeg clothing all performed well.

Morrison says that service standards improved at the checkouts and on the shop floor, and a new automated ordering system has helped to reduce stock levels while still improving stock availability for customers.

Unless otherwise stated, all estimated figures, including prospective dividend yields, are taken from a consensus of analyst forecasts compiled by Thomson Reuters. These estimates should not be taken as a reliable indicator of future performance.

All yield figures are variable and not guaranteed. The information in this article is not intended to be advice or a recommendation to buy, sell or hold any investment mentioned, nor is it a research recommendation. No view is given as to the present or future value or price of any investment, and investors should form their own view in relation to any proposed investment.

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Deal now Deal for just £11.95 per trade in a ISA, SIPP or Fund & Share Account

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