Euronews is no longer accessible on Internet Explorer. This browser is not updated by Microsoft and does not support the last technical evolutions. We encourage you to use another browser, such as Edge, Safari, Google Chrome or Mozilla Firefox.
BREAKING NEWS

Britain's Morrisons sees better second half after first dip in sales since 2016

Euronews logo
Text size Aa Aa

LONDON (Reuters) – Morrisons <MRW.L>, the smallest of Britain’s big four supermarket groups, forecast improved sales in the second half of the year despite the threat of a no-deal Brexit, after quarterly sales fell for the first time since 2016.

Shares in Morrisons, which trails market leader Tesco <TSCO.L>, Sainsbury’s <SBRY.L> and Walmart’s <WMT.N> Asda in annual sales, were up 3.3% on the positive outlook. Its shares have fallen 25% over the past year.

Chief Executive David Potts told reporters Morrisons was well prepared for all Brexit scenarios and said recent talk of the firm as a takeover target was “pure speculation”.

Some analysts have suggested Morrisons could be a candidate for a takeover by an overseas private equity firm, given the fall in its share price and the weakness of the pound making deals cheaper.

The company also said it is extending its partnership in Britain with online giant Amazon <AMZN.O> by signing a multi-year agreement rather than the current rolling contract.

“We’ve agreed to work together across longer range important opportunities,” said Potts, without giving details.

For the six months to Aug. 4, the Bradford-based company reported a 5.3% rise in pretax profit before one-off items to 198 million pounds – ahead of analysts’ average forecast of 192 million pounds. Revenue rose 0.4% to 8.83 billion pounds.

Group like-for-like sales, excluding fuel and VAT sales tax, fell 1.9% in its second quarter, having increased 2.3% in the first quarter. Analysts had on average forecast a 2% fall.

Second quarter results faced a tough comparison with a year earlier, when sales were boosted by hot weather, a royal wedding and the soccer World Cup. The sales fall followed 14 straight quarters of growth.

BATTEREDCONSUMERCONFIDENCE

With just 49 days to go until Britain is due to leave the European Union, the country has yet to agree a withdrawal arrangement, raising the risk of a disorderly “no-deal” Brexit.

UK consumer confidence continued to be weak but Morrisons’ data had not indicated consumers were stockpiling ahead of Brexit, said Potts.

“The overhang of Brexit is still there where consumers are quite careful and quite savvy just now and their confidence in the economy and their own finances has taken a bit of a battering,” he said.

The British government’s plans in the event of a no-deal Brexit warn of severe disruption to cross-channel routes, affecting the supply of certain fresh foods.

Morrisons has stockpiled ambient goods and packaging materials, shifted some supplies away from the main Calais-Dover route, and obtained Authorised Economic Operator status, which it hopes will speed-up border checks in the event of hold-ups.

Potts said the group would also be able to leverage its British credentials – two thirds of what it sells is British, it is Britain’s No.2 producer of food, and is British farming’s biggest single supermarket customer.

Morrisons will pay a special dividend of 2 pence a share, taking its total interim payout to 3.93 pence a share.

(Reporting by James Davey, Editing by Paul Sandle and Deepa Babington)

euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on euronews.com for a limited time.