Morrison’s sales soar over Christmas but new lockdown drives up costs

0 36

Wm Morrison Supermarkets PLC (LON:MRW) has reported increasingly strong sales growth in recent weeks but said profits will face another GBP20mln hit from new coronavirus (COVID-19) lockdown restrictions.

The FTSE 100 grocer said its group like-for-like (LFL) sales were up 8.1% for the 22 weeks of the second half up to January 3, 2021, with retail LFL sales up 7.2% and wholesale rising 0.9%. Including fuel, where sales have plummeted 23% due to lower demand amid the pandemic, LFL sales were up 1.9%.

The Bradford-based grocer said LFL sales excluding-fuel in the third quarter to November 1, 2021, of 7.1% briefly increased further at the start of the second England lockdown, dipped and then reached 7.3% for the nine weeks so far in the fourth quarter, including 8% over the last three weeks in December and a Christmas peak of 9.3%.

Online sales have more than tripled so far in the fourth quarter, across both and the new same-day ‘Morrisons on Amazon’ service.

Profit before tax and exceptional items is still expected by Morrison’s board to reach GBP420mln-GBP440mln, or GBP190mln-GBP210mln once business rates have been paid, though exceptionals are creeping up.

On top of the extra GBP40mln direct COVID-19 costs announced in early December, Morrisons said it now expects to incur another GBP10mln or so before the year end after the new restrictions unveiled by the UK prime minister, Boris Johnson on Monday, inflating total direct costs from the virus in the financial year of roughly GBP280mln.

Furthermore, there will be around another GBP10mln hit to profits resulting from the new lockdown from the closure of cafes and effect on fuel and food-to-go – although the grocer said it expects “the sustained and significant operational gearing from the strong sales growth to offset these extra COVID-19 costs and profit impacts”.

The group confirmed that a recently announced special dividend of 4p per share will be paid on January 25, 2021.

Leave A Reply

Your email address will not be published.