Morrison's eyes new growth avenues in tough market

New Chief Executive Dalton Philips said on Thursday the group would test a convenience store format in the first half of 2011 and that it had started to assess selling groceries online.

It will also invest further in food production, one of its key differentiators from larger rivals.

Morrison's said it expected low grocery market growth to continue in the second half of its financial year as it met forecasts with a 14 percent rise in first-half profit to 410 million.

Sales at stores open over a year, excluding petrol and VAT sales tax, rose 0.9 percent in the six months ended August 1, signalling a pick up from a 0.8 percent increase in the first quarter, but towards the bottom of analysts' expectations.

Morrison's said it was confident of delivering its profit expectations for the full financial year.

Mr Philips said: "Over the last six months I have spent time getting to know this great business and its people.

"Three observations stand out: Morrisons is a world class retailer; it

has real and positive differences in its fresh offer, food production and craft skills; and there are many opportunities ahead to drive our top line, increase efficiencies in the business and to capture growth.

"Today we are outlining plans to build on our strengths and generate profitable growth.

"I am delighted to be leading a great company and with the whole team, I am determined to make Morrisons better than ever."

Sir Ian Gibson, the chairman, said: "Our first half performance has been solid, in a tight market. At a time when value is a priority for everyone we have continued our run of market beating sales growth, attracting more customers to Morrisons than ever before, reflecting our

broad appeal.

"Our new CEO, Dalton Philips, has made a great start in the business

and with the leadership team is developing positive plans for the next phase of growth for Morrisons."