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Good news for Morrisons as group returns to profit

Published:  10 March, 2016

Big-four multiple retailer Morrisons bounced back into profit last year, according to figures released by the group today.

Pre-tax profits at the company hit £217 million in the year to January 31, considerably up on the £792 million loss posted in the 12 months to February 1, 2015.

However, the group's profits were largely delivered off the back of cost-cutting, as sales fell back 4% to £16.1 billion for the year.

The group is in the middle of the three-year cost-saving programme that is planned to deliver £1 billion in savings by the end of its next financial year.

It will take time to turn the business around fully, Morrisons said.

David Potts, chief executive of the group, said: "By improving the shopping trip for customers, we have started the journey to turnaround the business and make our supermarkets strong.

"Our listening programme is informing and shaping the six priorities that are now driving the improvements that customers are noticing."

Sales improved markedly across the year as the company fought to meet the challenge presented in the marketplace by the exponential growth of discount chains Aldi and Lidl.

Like-for-like sales excluding fuel fell 1.3% in the second half of the year, a considerable improvement on the 2.7% contraction recorded in the first half.

Like-for-like sales in the fourth quarter grew 0.1%, ahead of analysts' expectations.

Morrisons recently revealed encouraging like-for-like sales growth of 0.2% over the Christmas trading period.

The group's market share continues to decline, however, according to the latest figures from Nielsen for the 12 weeks ending February 27, 2016.

Morrison's has a market share of 10.4%, Nielsen reported, down from 10.8% year on year, with sales down 3%.

The group recently announced a partnership with online behemoth Amazon to provide produce for the latter's UK food delivery service.

Hannah Maundrell, editor in chief at, said:

 "Watching Morrisons surf the supermarket storm and start to turn things around has become fascinating.

"They're still losing market share but making up for it with their lucrative Amazon deal and more efficient model. They'll clearly need to polish their product line and delivery arrangements to stand up to the very public scrutiny they'll be subject to as Amazon's grocery partner.

"If either aren't up to scratch then the inevitable scathing reviews could do the supermarket more harm than good in the long run.

"On the upside, the lessons they learn by partnering with Amazon should ultimately translate into a better experience for the supermarket's direct customers."