Menu Menu Menu
Login Login Log in Search Search Search

Morrison (Wm) Supermarkets (MRW) Ordinary 10p

Sell:242.30p Buy:242.40p 0 Change: 5.10p (2.15%)
FTSE 100:0.06%
Market closed Prices as at close on 30 March 2017 Prices delayed by at least 15 minutes | Switch to live prices |
Sell:242.30p
Buy:242.40p
Change: 5.10p (2.15%)
Deal now Deal for just £11.95 per trade in a ISA, Lifetime ISA, SIPP or Fund & Share Account
Market closed Prices as at close on 30 March 2017 Prices delayed by at least 15 minutes | Switch to live prices |
Sell:242.30p
Buy:242.40p
Change: 5.10p (2.15%)
Market closed Prices as at close on 30 March 2017 Prices delayed by at least 15 minutes | Switch to live prices |
Deal now Deal for just £11.95 per trade in a ISA, Lifetime 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 (9 March 2017)

Morrison has reported good progress this year, with like-for-like (LFL) sales (excluding fuel) over the year rising 1.7%. Boosted by a strong Christmas, Q4 LFL growth was 2.5%.

However, the group also raised concerns over the potential impact of weaker sterling, with pension, staff and depreciation costs set to rise too. The shares fell 4.7% on the news.

Our View

CEO David Potts' strategic plans for the group make perfect sense; focus on the consumer, reinvest in pricing and improve store appeal. The early results mean that while he may still describe the group as a work in progress, that progress is becoming increasingly tangible. 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 around 85% of stores under freeholds Morrison has low rental obligations. This gives the group strong cash flow, and helps support the dividend. The shares currently offer a prospective yield of 2.4%, and analysts are expecting the payout to increase in the coming years.

Looking ahead, the group's expansion plans focus on capital light wholesale agreements. Its plans include rolling out convenience stores on petrol forecourts in partnership with Rontec, supplying Amazon Fresh with groceries and reviving the Safeway brand.

With billions of pounds of sales and attractive cash generation, Morrison certainly has potential. However, it still faces many challenges. The absence of a convenience offer of any scale and the fact its online offering relies on a partnership with Ocado are just two examples of areas where the group is lagging behind.

The fall in sterling after the referendum has added further uncertainty too. With the cost of imported goods rising, relationships all the way along the chain from producer to consumer are at risk of disruption. While it will want to keep prices low to stay competitive, profit margins of under 3% mean the group has little room for manoeuvre if suppliers refuse to take the hit.

Full Year Results

Excluding fuel, revenue was £12.7bn, down 0.5% as like-for-like sales growth was more than offset by the impact of store closures. As price deflation turned to inflation over the year, fuel sales rose 7.3% to 3.4bn.

Operating profit margin increased 0.17 percentage points to 2.6%. This helped underlying profit before tax rise for the first time in five years, jumping 11.6% to £337m, towards the upper end of previous guidance.

The final dividend of 3.85p supports an 8.6% increase in the full year dividend to 5.43p.

A further £393m of cost savings were realised over the year, taking the three year cumulative total above £1bn, with further improvements expected in the coming years. Morrison's free cash flow of £670m helped net debt fall by £552m to £1.2bn. The group expects this to fall below £1bn by the end of 2017/18.

Morrison acknowledges there are challenges ahead, especially around the impact on imported food prices if sterling stays at lower levels. However, the group says its strong cash flow and balance sheet gives it the confidence it can continue its recovery.

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.

Previous Morrison (Wm) Supermarkets updates




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

The London Stock Exchange does not disclose whether a trade is a buy or a sell so this data is estimated based on the trade price received and the LSE-quoted mid-price at the point the trade is placed. It should only be considered an indication and not a recommendation.

Trades priced above the mid-price at the time the trade is placed are labelled as a buy; those priced below the mid-price are sells; and those priced close to the mid-price or declared late are labelled 'N/A'.