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Morrisons today showed that its plan to eat into rivals' territory in London and the south is bearing fruit as it unveiled another leap in sales.
The UK's fourth-biggest grocer has been one of the clear winners from the recession, with its offering of cheap, fresh food luring in hundreds of thousands of new customers.
By tradition a Northern outfit — it was founded in Bradford in 1899 — it has been moving strongly into the south this year, opening 22 new stores.
The man behind the transformation, chief executive Marc Bolland, today said he was stepping up the bid to become a truly nationwide player.
“About 35% to 40% of the country does not have access to a Morrisons with a 15-minute drive. We want to fix that,” he said.
In the six months to 2 August, revenue is up 5% to £7.5 billion. Like-for-like sales, which strip out the effect of new store space, rose 7.8%.
That's a level few rivals can match. Asda, the second-biggest player, enjoyed a 7.2% rise for the three months to the end of June.
Morrisons now serves 10 million shoppers a week from more than 400 stores.
“More people are coming through the door. Why? They see great value. And they see lots of product introductions around fresh food,” said Bolland.
Although Morrisons is growing faster than others in its established stores, the continued expansion of the entire industry means that market share levels are relatively stable.
Tesco remains the clear leader with 31% of the UK grocery market.
For the first half of the year, Morrisons made a profit of £359 million — a rise of 22%. That enabled it to raise the interim divi 35% to 1.08p a share.
However, it is warning that it expects growth to slow in the second half as inflationary pressures ease.
Analysts say Morrisons has put the botched £3 billion takeover of Safeway in 2004 firmly in the past. It had problems integrating the two firms' very different computer systems which affected performance for some time.
The shares rose 1.9p to 282.8p.
Stockbroker Charles Stanley said in a note this morning: “We expect Morrisons to continue to deliver industry-leading sales growth and significant potential exists to further expand operating profit margins. Earnings growth is forecast to be the strongest in the sector over the next three years.”
Morrisons took the axe to its final salary pension scheme recently, following others such as Barclays.
Critics say some big employers have used the economic downturn as an excuse to water down retirement benefits for staff.
Reader views (4)
we had morrisons under the safeway banner as they did not want to set up here. safeway were great and ASDA took the stores over and invested in them. ASDA are fantastic, we have tesco and sainsburys amd marks and sparks. ASDA are the best and morrisons from the effort they provided can stay away
- Robert, newtownabbey northern ireland, 10/09/2009 18:54
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They are just great at making profits.They pay their staff peanuts and usually only employ staff part time.I still beleive asda are better but then i buy my meat from a local butcher and vedge from a local greengrocer far superior quality than supermarket rubbish.I also have zero waste as my partner and i buy what we need a day or two at a time.
- Danny Faircloth, darlington uk, 10/09/2009 13:30
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I have been pleasantly surprised by Morrisons, particularly the range of organic food they stock. They have a very down to earth approach to retailing, without all the ad-heavy hype of their competitors.
- Jools, London, 10/09/2009 13:24
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Well, it must be me but I think Morrisons is an awful shop. The ones I have been in have been dark, dingy and with strange looking fresh produce. Still each to their own.
- Sally, Hertford. UK, 10/09/2009 12:31
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