Shop prices are expected to creep up this year as a result of the pound’s slump in value since the Brexit vote, but the Bradford-based grocer said it will put customers first.
Chief executive David Potts said: “We are determined to be more competitive. Price is crucial. There is no alternative but to be more competitive. “We are blessed with vertical integration. Half of our fresh food we make ourselves. It’s a reason to remain cheerful in these turbulent times. We are not immune to changes, but we can be on the front foot.
“Price is massively important to our customers so it has to be important to us regardless of macro-economic circumstances.”
He said that if the pound stays low, causing higher import costs, Morrisons has the capability to manufacture more food itself.
“In our fish plant in Grimsby we have doubled capacity,” he said.
He was speaking as Morrisons announced a 50 per cent rise in pre-tax profits to £325m in the year to January 29. On an underlying basis, profits rose 11.6 per cent to £337m, its first rise in annual profit in five years.
Like-for-like sales rose 1.7 per cent over the year and by 2.5 per cent in the fourth quarter.
Revenue came in at £16.3bn, up 1.2 per cent, as the results solidified the chain’s return to form under Mr Potts.
“Our full year of like-for-like sales and profit growth was powered by listening to customers, and shows what our hard-working team of food makers and shopkeepers can do,” he said.
“But, it’s only one year. Our turnaround has just started, and we have more plans and important work ahead. If we keep improving the customer shopping trip, I am confident that Morrisons will continue to grow.”
The group said that customers numbers rose 4 per cent over the year and customer satisfaction has risen steadily.
Despite the better than expected results, the group’s shares closed down 6 per cent. This was after the group warned of uncertainties ahead, especially around the impact on imported food prices if sterling stays at lower levels.
The group also flagged an increase of up to £50m in depreciation and pension costs and said it will continue to invest in higher wages for staff.
Despite saying that all these factors were incorporated into its plan, the shares fell 16p to 231p.
John Ibbotson, director of the retail consultancy Retail Vision, said: “Morrisons has been transformed over the past two years from a rudderless ship to a modern-day grocer with a growing sense of direction.
“It has left Asda in the dust and is looking in a similar state of health to the resurgent Tesco.”
He said that Morrisons has regained shoppers’ trust and is luring them back from the discounters.
“Its shareholders must be thinking that David Potts has got the Midas touch,” he said.
“In reality, there was no magic involved. Potts has simply returned Morrisons to its roots of low prices, good value and fresh food. It’s a back-to-basics approach that has worked impeccably.
“It’s encouraging that Potts accepts that the Morrisons turnaround has only just begun, as there is indeed a very long way to go.
The company said its Price Crunch initiative has seen more customers come through its doors.
Morrisons, which secured a deal to sell groceries through Amazon under Mr Potts, added the internet titan’s lockers are now in over 400 of its stores.
In addition, following a successful trial, a similar roll-out is also planned with Doddle.