Amazon deal brings fresh hope to Morrisons

MORRISONS has enjoyed a sharp jump in its share price recently, following the news that it had signed a lucrative deal with internet giant Amazon.

File photo dated 05/10/15 of a Morrisons plastic bag, as the supermarket posted an annual profit of £242 million, down from £345 million a year ago after closing a number of stores. PRESS ASSOCIATION Photo. Issue date: Thursday March 10, 2016. See PA story CITY Morrisons. Photo credit should read: Chris Radburn/PA Wire

Morrisons’ shares fell by more than a quarter last year after hitting a high of 208p in March shortly after the appointment of new CEO David Potts.

However, in recent weeks they have recovered on the news that it had a positive Christmas and, earlier this month, they shot up nine per cent on the news of the Amazon tie-up.

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The big supermarket players have been quaking at the thought of Amazon stealing their customers by launching a version of its US Amazon Fresh service in the UK, but the online retailer has selected Morrisons as its partner instead.

The deal is expected to introduce wealthy Amazon Prime customers to Morrisons’ cut-price fresh and frozen food offering.

Morrisons made a late entrance to online and only has around three per cent of the UK online grocery market so it is bigger rivals Tesco, Sainsbury’s and Asda that are expected to be hit by Amazon’s entry into fresh food.

Morrisons has also announced plans to extend its own online grocery deliveries to the whole of the UK under a new agreement with Ocado. It will take space in a new Ocado London warehouse, which will enable Morrisons to deliver south of the River Thames, where it doesn’t currently operate.

Ocado will also provide Morrisons with software to fulfil online orders from its own stores, allowing Morrisons to enter the Scottish and North East online market for the first time.

Mr Potts, a former Tesco director, has made some canny decisions since he joined Morrisons and these new contracts with Amazon and Ocado are just what the company needs, according to analyst