Morrison Sales Decline Shows Size of Task Facing CEO Potts

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Wm Morrison Supermarkets Plc Chief Executive Officer David Potts
Wm Morrison Supermarkets Plc Chief Executive Officer David Potts said, “My initial impressions from my first seven weeks are of a business eager to listen to customers and improve.” Source: Wm Morrison Supermarkets Plc via Bloomberg

Wm Morrison Supermarkets Plc saw little change in sales patterns during the last quarter as revenue declines persisted in the face of discount-led competition, providing a reminder of the scale of the task facing new Chief Executive Officer David Potts.

Sales at stores open at least a year fell 2.9 percent, excluding fuel, in the 13 weeks ended May 3, the Bradford, England-based retailer said Thursday in a statement. That compares with the prior quarter’s 2.6 percent drop and the median estimate of 13 analysts for a 2.8 percent decline.

Potts has been tasked with arresting a slump in sales that stretches back more than three years as the grocer has been directly in the firing line of budget chains Aldi and Lidl. Less than two months into his tenure, the CEO has cut almost half of the company’s management board and announced plans to recruit 5,000 shop staff.

“My initial impressions from my first seven weeks are of a business eager to listen to customers and improve,” Potts said in the statement. “This is a business with many attributes, some unique. Our task is to use those advantages to improve the shopping trip for customers and create value.”

Morrison shares fell 1.4 percent to 177.2 pence at 8:27 a.m. in London after adjusting for the stock trading without the right to a 9.62 pence dividend.

Morrison said it expects underlying pretax profit to be higher in the second half of the financial year than the first. Steps being taken to simplify the head office will lead to one-time costs of 30 million pounds ($46 million) to 40 million pounds, the retailer said.

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