Bid target Morrisons reports a fall in profits after Covid costs

Morrisons, which is in the middle of a £7bn bid battle between two American private equity firms, has reported a 37 per cent fall in first half profits, as a result of Covid-19 costs and the impact the pandemic has had on its cafes, petrol stations and the food-to-go market.

The Bradford-based grocer reported an underlying pre-tax profit of £105m in the six months to August 1, down from £167m in the same period last year.

Morrisons said direct Covid-19 costs were £41m, while £80m of profit was lost in cafes, fuel and food-to-go because of the pandemic.

The firm said that total revenue including fuel rose 3.7 per cent to £9.05bn, with like-for-like sales, excluding fuel and VAT sales tax down 0.3 per cent.

David Potts, Morrisons' chief executive

The group pointed out that it had seen very strong two year group like-for-like sales of 8.4 per cent.

Morrisons' chairman, Andrew Higginson, said: “Across the business the whole Morrisons team has shown commendable resilience facing into a variety of continuing challenges during the first half, including the ongoing pandemic, disruption at some of our partner suppliers, and the impact on our supply chain of HGV driver shortages.

"As we approach our busiest time of year, I’m confident the team will continue to rise to all challenges and keep up all the good work to improve the shopping trip for customers.”

David Potts, chief executive, added: “I want to thank all Morrisons colleagues for their unswerving dedication and commitment during the long pandemic period.

"Their innovation, enterprise, hard work and boundless compassion have shone through, and a new Morrisons is taking shape. You are a special team and together have built a strong and broad foundation on which Morrisons will thrive in the future.”

Morrisons maintained its profit guidance for the full 2021-20 year, but it warned of industry wide inflation during the second half, driven by sustained recent commodity price increases and freight inflation, and the current shortage of HGV drivers.