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Morrison (Wm) Supermarkets (MRW) Ordinary 10p

Sell:245.00p Buy:245.10p 0 Change: 0.1p (0.04%)
FTSE 100:0.15%
Market closed Prices as at close on 23 May 2017 Prices delayed by at least 15 minutes | Switch to live prices |
Sell:245.00p
Buy:245.10p
Change: 0.1p (0.04%)
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 23 May 2017 Prices delayed by at least 15 minutes | Switch to live prices |
Sell:245.00p
Buy:245.10p
Change: 0.1p (0.04%)
Market closed Prices as at close on 23 May 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
The selling price currently displayed is higher than the buying price. This can occur temporarily for a variety of reasons; shortly before the market opens, after the market closes or because of extraordinary price volatility during the trading day.

HL comment (4 May 2017)

Morrisons has released a trading statement showing that in the 13 weeks to 30 April group like-for-like (LFL) sales excluding fuel were up 3.4%, with Retail contributing 3% and Wholesale 0.4%. The shares rose 1.8% 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 the stores' appeal. 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, Morrisons has low rental obligations. This gives the group strong cash flow, and helps support the dividend. The shares currently offer a prospective yield of 2.5%, 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, Morrisons certainly has potential. However, it still faces many challenges. The absence of a convenience footprint 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 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 Morrisons has little room for manoeuvre if suppliers refuse to take the currency-induced hit.

Q1 trading update

Morrisons says that sales were strong over the key events in the quarter, Valentine's Day, Mother's Day and Easter, with customer satisfaction levels again improving.

During the period, the group further expanded its Best' range and introduced a healthy 'Eat Smart' range. 'Morrisons at Amazon' continues to grow, with the same-day and one-hour delivery service recently extended across London postcodes.

David Potts, CEO of Morrisons said the group is "improving the shopping trip in many different ways, which is making Morrisons more popular and accessible for customers. These new initiatives in-store, online, in wholesale and services are beginning to build a broader, stronger Morrisons."

Morrisons' expectations and guidance for 2017/18 are unchanged, including year-end net debt of less than £1bn.

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.

Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.

Previous Morrison (Wm) Supermarkets updates




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

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