Morrison Boosts Forecast After Best Christmas in Seven Yearsby
Shares rise to a near three-year high as revival gains speed
Grocer’s CEO Potts says company has ‘found its mojo’
Wm Morrison Supermarkets Plc raised its profit forecast after posting its best Christmas sales in seven years, sending the U.K. grocer’s shares to a near three-year high as it fights back against the growth of discounters.
Pretax profit for the year ending this month will be 330 million pounds ($400 million) to 340 million pounds, the Bradford, England-based company said Tuesday, above what it said was the analysts’ consensus of 326 million pounds. Same-store sales excluding gasoline rose 2.9 percent in the nine weeks ended Jan. 1, the best performance by one of the big four U.K. grocers since 2013.
“We are delighted to have found our mojo,” Chief Executive Officer David Potts said on a call with reporters.
Morrison is the first listed U.K. grocer to disclose how it fared over the crucial Christmas shopping period and its better-than-expected sales are an early indication that Britons shrugged aside economic uncertainty when planning their holiday feasts. The rosy results contrast with British apparel retailer Next Plc, which cut its profit forecast last week after a disappointing holiday period.
Morrison’s shares rose as much as 5.1 percent to 249.4 pence in London, the highest price since Feb. 12, 2014 and extending last year’s 56 percent advance. Shares of market leader Tesco Plc also advanced as much as 6.5 percent, while J Sainsbury Plc gained as much as 3.2 percent. Tesco is scheduled to release its Christmas results on Thursday with Sainsbury reporting tomorrow.
“Hopes will be high that both can follow suit and deliver more positive numbers,” Hargreaves Lansdown analyst George Salmon said by e-mail.
Morrison cut prices on liquor in the run-up to Christmas, with five-liter kegs of beer reduced from 15 pounds to 10 pounds and a 1.5-liter magnum of prosecco selling for 10 pounds. Potts also cited a notable contribution from a revamped Christmas premium range. The CEO said smoked salmon and packs of “shimmering macaroons” proved popular with Brits.
“The turnaround is exceptional,” John Ibbotson, an analyst at consultant Retail Vision, said by e-mail. “Morrisons has returned to its roots and once again started to deliver fresh food, low prices and good value.”
Morrison’s results came alongside 12-week sales results for the broader grocery sector:
- Sales across the U.K. grocery industry rose 1.8 percent in the 12 weeks to Jan. 1, researcher Kantar Worldpanel said separately in a statement today
- Grocery prices rose 0.2 percent, marking the first period of inflation since Sept. 2014