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UK's Morrisons looks to summer of socialising and sport for trading boost

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UK's Morrisons' sales growth slows due to tough COVID comparative
UK's Morrisons' sales growth slows due to tough COVID comparative   -   Copyright  (c) Copyright Thomson Reuters 2021. Click For Restrictions - https://agency.reuters.com/en/copyright.html
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By James Davey

LONDON (Reuters) -British supermarket group Morrisons expects the relaxation of pandemic restrictions on socialising and major sporting events, including soccer’s Euro 2020 and the Olympics, will drive another boost to sales this summer.

Chief Executive David Potts said Britons’ rising optimism over much reduced COVID-19 cases, the success of the vaccination programme in the UK and an improving economy would encourage them to socialise and celebrate.

“That sense of optimism is percolating through the country and it will lead to people wanting to celebrate events,” he told reporters on Tuesday.

“We’ll be doing everything we can to be part of that,” he said, pointing to a potential boost to trade from families getting together in bigger groups, and high demand for barbecue food, pizzas and beer.

Morrisons reported a slowdown in quarterly sales growth as it compared with exceptionally busy trade a year earlier when Britain’s first COVID-19 lockdown prompted panicked shoppers to send sales soaring.

The group, which trails market leader Tesco, Sainsbury’s and Asda in annual revenue, said like-for-like sales, excluding fuel, rose 2.7% in the 14 weeks to May 9, its fiscal first quarter – ahead of analysts’ average forecast of up 1.6% but down from growth of 9.0% in the previous quarter.

Retail sales rose 1.6%, wholesale sales were up 1.1% and online sales more than doubled, partly driven by a partnership with Amazon.

Comparing the period with 2019, before the pandemic started to disrupt trading last year, group like-for-like sales rose 8.7%.

Shares in Morrisons were up 0.7% at 0811 GMT.

“The pandemic is not yet over, but it is in retreat across Britain and there is much to be positive about as something approaching normal life begins to take shape,” said Potts.

He noted that Morrisons’ petrol forecourts were getting busier, and it was seeing encouraging recent signs of a strong rebound of food-to-go, take-away counters and salad bars. Its cafés will fully reopen on Monday when Britain is due to ease restrictions on indoor hospitality.

The group maintained its forecast for 2021/22 profit before tax and exceptionals including business rates paid to be higher than the 431 million pounds profit achieved in 2020/21, excluding the waived rates relief.

It also said it would reduce debt and forecast another year of “meaningful profit growth” in 2022/23.

Morrisons said it would refresh its long-term capital allocation plans when it reports interim results in September.

(Reporting by James Davey; Editing by Kate Holton and Susan Fenton)

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