Morrisons profits soar amid record sales

MORRISONS today hailed "another good year" as profits climbed 21 per cent and sales hit record levels.

The UK's fourth biggest supermarket chain reported pre-tax profits of 767m for the 12 months to January 31, from 636m in the previous year, beating analysts expectations.

Bradford-based Morrisons, which said it expects economic conditions to remain challenging this year, saw like-for-like sales growth slow across the period to six per cent, compared with 8.2 per cent the year before.

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The grocer saw turnover rise six per cent to 15.4 billion. It is engaged in a growth strategy put in place by former boss Marc Bolland, who has left to join Marks & Spencer.

Morrisons opened 43 new outlets in the year, taking its total to 425, and it plans to keep expanding its store base to reach more customers.

Last year presented a challenge for UK supermarkets as the recession squeezed consumers' wallets, a trend Morrisons expects to continue.

"We expect the economic environment to remain challenging, disposable incomes to be under pressure and value to be a high priority for consumers," Morrison said, echoing the caution of other retailers, who fear steps to reduce government debt, like raising taxes and cutting public spending, could hit consumers.

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Morrisons said it put in place 30,000 price cuts during the year and "delivered a promotional programme that enabled our customers to save money whilst eating good fresh food".

Sales of its own label value range rose 34 per cent in the year, while sales of premium organic and fairtrade products declined.

Christmas trading saw a surge for the firm as it outperformed the market for the fourth year in a row during the festive season, eclipsing larger rivals.

The grocer hiked its dividend 41 per cent to 8.2 pence a share as the group reaped the benefits of a three-year drive to improve its operating systems and distribution.

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So far the group has focused on expanding across Britain, and new boss Dalton Philips, who joins from Canadian grocer Loblaw, will have to decide whether to follow bigger rivals into markets like general merchandise, services and online.

The firm said that based on research from Kantar it believes it has grown its share of the market to 12.6 per cent from 12.3 per cent.

Nick Bubb, of Arden Partners, said the results comfortably beat analyst expectations and were "pretty impressive".

Growth exceeded rival Sainsbury's as like-for-like growth was driven through promotions without sacrificing margins.

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Meanwhile, food price inflation also buoyed the industry for much of the year.

Mr Bubb said the new chief executive is inheriting a business in good shape, with growth potential in online and overseas markets.

"It's an ideal place to be coming in at because you have fantastic momentum and lots more to do in the long term," he said.

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