Morrisons is to report its lowest annual profit in eight years and scrap plans to launch 100 convenience shops a year as it concentrates on restoring the core supermarket chain to health.
The Bradford-based grocer will also announce a big cut to its future dividend payments to fund expenditure on its main stores, which have lost customers to discounters Aldi and Lidl.
Morrisons has indicated it will make a pre-tax profit before one off items of between £335m and £365m when it announces annual results on Thursday.
Analysts are predicting an average forecast of £342m for the year to February 1. This is less than half the £785m profit made in 2013-14 and a third straight year of decline.
Like-for-like sales are expected to fall 5.9 per cent, down from a 2.8 per cent decline a year ago.
The slump reflects Morrisons’ strategic U-turn last year when it said it would spend £1bn on price cuts over three years to stem the loss of shoppers to the discounters.
Morrisons’ new chairman Andy Higginson will announce plans to scale back the roll out of 100 convenience stores a year as the group focuses all its efforts on improving the core stores.
Mr Higginson has said that getting Morrisons back to robust health will take three to five years.
“There’s a lot of customers out there who would love to be shopping in Morrisons, but can’t at the moment because we’re not doing a good enough job,” he said.
“If we improve the work we do for them they’ll come back.”
Analysts expect the future dividend payout will be cut by between a third and two thirds in order to divert cash to stores.
Morrisons has named former Tesco executive David Potts as its new CEO, succeeding Dalton Philips, who was ousted in January. Mr Potts, who will start on March 16, is expected to improve Morrisons’ store standards, customer service and product offer.
Reports that Mr Philips will receive a £3m pay-off on Thursday are seen as premature as bonuses are yet to be determined.
However he is likely to receive between £2m and £3m under the terms of his contract, including an annual salary of £850,000 and a deferred bonus from three years ago.
Last week shareholders waived through a special resolution releasing the company from any claims following a technical mistake over dividend payments.