Sales show value of range for Morrisons

SUPERMARKET chain Morrisons posted a healthy rise in profits and sales despite "the toughest trading environment seen for many years".

The firm said disposable incomes have dropped significantly following the tightening of credit availability and increases in the prices of energy, food and household items.

But it overcame the economic slump with pre-tax profits rising by 12.8 percent to £309 million and turnover increasing by 13.5 per cent to £7.1 billion.

Central to its continued growth was its value ranges, which it said had helped it bring in half a million more customers every week.

The firm, which relaunched cheaper lines and slashed prices on several everyday items to 50p, said like-for-like sales, excluding fuel, rose by 7.6 per cent in the 26 weeks to August 3, an increase on the seven per cent growth it recorded in the first quarter.

Chief executive Marc Bolland said: "To have grown like for like sales by 7.6 per cent in this economic climate is a clear testament to the strength of Morrisons' recovery.

"More shoppers are choosing Morrisons because of our price-crunching deals and our unrivalled fresh offer in store."

The company said that the costs of basic raw materials had surged far higher than a year ago.

Rice is now 119 per cent more expensive, with crude oil up 66 per cent and lamb up 32 per cent. Beef and wheat have also increased by around a quarter.

Sales in areas across the UK showed growth, with Scotland continuing to be "particularly strong". Customer numbers were up by 4.7 per cent in like-for-like stores.

In a statement with its results, the firm said: "During the period the slowdown in the economy inevitably led to a strong focus on value. Whilst our premium ranges and fresh food continued to show good growth, we also placed stronger emphasis on our value ranges, which were relaunched, and the promotions for which Morrisons is renowned."

The company said its first half performance gives it confidence that it will achieve profit expectations for the full year, although it expects the second half to be "highly competitive" as disposable incomes come under further pressure.

Sir Ian Gibson, Morrisons' non-executive chairman, said: "This is a solid set of interim results in the toughest trading environment seen for many years. The management team is very focused on delivering great day to day value to our customers"

Source: Business.scotsman.com