New Morrisons CEO David Potts has bought another £500,000 worth of shares in the beleaguered supermarket chain, demonstrating his faith in the firm’s future recovery.
Morrisons shares have fallen by almost a quarter since he joined the Bradford-based retailer in March despite his swift action to cut hundreds of head office jobs and introduce 5,000 more staff into stores.
Morrisons is battling to win back customers who have decamped to discounters Aldi and Lidl following price hikes under Morrisons’ previous management.
In his latest share purchase Mr Potts bought 314,881 shares at 158.79p, taking his holding to 822,881 shares which is worth around £1.3m.
Last week Morrisons reported a plunge in first-half profit to its lowest level in nine years, showing the scale of the task facing Mr Potts to revive the company’s fortunes.
Following the results, Morrisons’ finance director Trevor Strain spent just under £100,000 on 58,453 shares, taking his holding to 97,794 shares.
Morrisons has warned that its recovery will take “years not months” and last week it announced the closure of 11 loss-making supermarkets, including the store in Northallerton, putting 900 jobs at risk.
The news came as the chain announced a 47 per cent slump in half year profits to £126m.
“We have a long, challenging and important journey ahead. It’s going to take years not months,” said Mr Potts.
“Our aim this year is to stabilise our trading position.”
Analyst Bruno Monteyne at Bernstein said Morrisons is yet to present a clear plan on how it can win back customers.
“It is still unclear how they will compete on price against Aldi, Lidl and Asda and on service against Sainsbury’s or Tesco,” he said.
However Mr Potts hit back with a six point plan to revive the firm’s fortunes.
He has also announced the sale of the group’s convenience stores, having decided they were in the wrong place to build a successful small store business.
It is selling its M local store network to retail entrepreneur Mike Greene, who plans to keep all 2,300 staff.
The latest announcement of a further 11 store closures are in addition to 10 supermarkets shut earlier this year. Mr Potts said the latest closures are all loss-making and are mainly smaller-sized supermarkets.
In our recent Blackfriar column, we urged Morrisons investors to take a long term view.
Last week, David Loudon the managing partner of Leeds-based stockbroker Redmayne-Bentley, said there was a possibility that Morrisons could become a takeover target.