Cost of living crisis leaves shoppers ‘off’, warns Morrisons, as private equity grocer sees profits slump
Private equity-owned grocer Morrisons reported a drop in profit as it warned that the cost-of-living decline had left shoppers “very dovish”.
The group, which was recently overtaken by German discount chain Aldi as the UK’s fourth-biggest supermarket, posted profits of £177m for the three months to July 31, around half of the £356m pounds delivered a year ago, as sales excluding fuel fell 3.1 percent. penny.
Morrisons blamed “temporary and transitional factors” as well as “unprecedented inflationary pressures” for the drop, which affected its food manufacturing operation.
Slow trading: Morrisons reported a drop in profit as it posted profits of £177m for the three months to July 31, around half the £356m it turned over a year ago.
Chief David Potts said it was “clear” the cost of living was starting to change habits as shoppers chose cheaper brands and bargains.
“The speed, scale and severity of energy price and cost increases, exacerbated by the terrible war in Ukraine, had a significant impact,” Potts said.
He said he was doing everything he could to keep prices low as Britain’s biggest supermarkets engage in a ruthless fight for customers.
The drop in profits is another setback for Morrisons, which on Tuesday saw its longtime chief operating officer and chief executive, Trevor Strain, resign.
He had previously held the role of chief financial officer and was tipped to be the next boss, and his departure came three months after chief commercial officer Andy Atkinson announced his plans to leave.
Earlier this year, chief financial officer Michael Gleeson turned to rival Asda. The exodus from the boardroom followed the sale of Morrisons to US private equity house Clayton, Dubilier & Rice (CD&R) in a £7bn deal last October.
But CD&R’s foray into the Bradford-based chain, founded in 1899 as an egg and butter stall, has been followed by a rocky period, with the loss of its ‘Big Four’ status likely to raise questions about whether it was OK to get out of the chain. stock Exchange.
Morrisons sales fell 4.1% in the three months to September, according to figures from consultancy Kantar, and its market share fell from 9.8% to 9.1%, demoting it to fifth place in the league table. of UK supermarkets.
The company has been under immense pressure from Aldi and its rival, German discounter Lidl, who have made strong inroads into the heart of Morrisons in northern England.
The pressure also showed no signs of abating after Aldi pledged this week to do “whatever it takes” to keep its prices at the lowest in Britain.
Aldi has attracted new customers in the past 12 weeks as shoppers look to stretch their money further.