Top story

Morrisons (MRW) said today it has seen “no negative impact” from Brexit after it announced second quarter like for like ex fuel sales growth of 2% this morning.

Overall first half sales in the six months to 31 July were down 0.4% to £8.03bn, due to positive like-for-like sales growth and negative net new space as a result of the planned programme of disposals and underperforming store closures.

Sales improved through the first half, and LFL has now been positive for three consecutive quarters. In Q2, ex-fuel LFL growth of 2% was up from 0.7% in the first quarter and second quarter LFL transactions were up 4.3%.

Fuel sales were up 3.2% to £1.6bn and fuel LFL up 3.5% as persistent deflation was more than offset by strong volume growth.

Underlying operating profit was up 11% to £207m after adjusting for last year’s restructuring costs, with margin up 26 basis points year-on-year to 2.6%.

Reported profit before tax was £143m, and underlying profit before tax was up 34% to £157m.

David Potts, chief executive, said: “We are pleased with positive like-for-like sales and 11% underlying profit growth in the first half. Our priorities are unchanged. We have made improvements to the shopping trip for customers and we plan to do more.”

Morrisons stated that it is “too early” to know how the recent referendum result could affect the British economy, but “customers tell us their food shopping has not changed”.

“We have seen no negative impact on customer sentiment or customer behaviour. There are some uncertainties, especially around the impact on imported food prices if sterling stays at its current lower level. However, our priorities are unchanged, and we will continue to invest in becoming more competitive and improving the shopping trip for customers.”

During the first half, it saw the first £5m of incremental profit from wholesale, services, interest and online, and remain confident of our £50m-£100m medium-term target.

Morrisons said it now expects to exceed its £1bn three-year cost savings target by the end of 2016/17 and it has also identified further productivity opportunities beyond 2016/17 in areas such as product ordering, distribution and in-store administration.

Morrisons has jumped 5.7% to 204.6p so far this morning on the back of the results.

Morning update

Also announcing first half results this morning is Waitrose, which shrugged off “challenging” market conditions to grow gross sales, market share and customer numbers.

Gross sales increased by 2.2% to £3.25bn in the six months to 30 July, while like-for-like sales decreased by 1% during the period. Online grocery sales grew by 4.3% and its share of the market was up to 5.2% and it had, on average, 250,000 more customer transactions a week compared to last year.

Operating profit before exceptional items was down 10.5% to £121.3m, impacted not only by the market conditions but also increases in pay to maintain differentials, investment in IT and higher supply chain costs following its move to a new national distribution centre.

Including the exceptional item of £25m for the write-down of property assets that it no longer intends to develop and related costs, operating profit was down 28.9% to £96.3m.

For the first six weeks of the second half, Waitrose gross sales have increased by 5% and 1.4% on a like for like basis excluding petrol.

The overall John Lewis Partnership sales were up 3.1% to £5.3bn, but profit before exceptional items was down 14.7% to £81.9m as its “responds to the deep structural changes in the retail market”.

Sir Charlie Mayfield, chairman of John Lewis Partnership, commented: “We have grown gross sales and market share across both Waitrose and John Lewis, but our profits are down. This reflects market conditions and, in particular, steps we are taking to adapt the Partnership for the future.

“These are not as a consequence of the EU referendum result, which has had little quantifiable impact on sales so far. Instead there are far reaching changes taking place in society, in retail and in the workplace that have much greater implications.”

This morning also brings a Q2 trading update from Booker (BOK), which has announced group sales, including Budgens and Londis, rose by 15.2% on the same period last year with non-tobacco sales up 15.5%.

Both the Catering and Retail sides of Booker Group performed well. Like-for-like non tobacco sales grew by 0.9%, while total like for like group sales were down 0.4%. Tobacco sales continued to be adversely impacted by the ban on small stores displaying tobacco products, down 3.5% like-for-like.

Charles Wilson, chief executive, said: “Booker Group continues to make good progress with sales in the quarter up 15.2%. Our plans to Focus, Drive and Broaden Booker Group are on track. Budgens and Londis joined the Group last September and are making a solid contribution. We continue to help our retail, catering and small business customers prosper through improving our choice, prices and service.”

Finally on a busy morning, butchery group Crawshaw (CRAW) has announced it has experienced “supressed footfall patterns” over recent weeks in a trading update.

It said: “During the prior couple of weeks, experienced some suppressed footfall patterns caused by a combination of the international football, adverse weather and Brexit.”

“These factors persisted through to the end of the half year period, resulting in a further reduction in like for like sales for the half year, although this was partly mitigated again by a further strengthening of gross margin.”

The group said it is acting quickly to restore sales momentum and insists that this can be achieved rapidly in readiness for the “very important” winter and festive season.

On the markets this morning the FTSE has edged down 0.2% to 6,662.4pts.

Booker is up 2.8% to 182.8pts, while Crawshaw has collapsed 39.5% to 44.5p.

Other big risers include Coca-Cola HBC (CCH), up 4.2% to 1,733p, Tesco (TSCO), up 3% to 166.5p and Nichols (NICLS), up 2.8% to 1,419p.

Fallers include B&M European Value Retail (BME), down 1.6% to 257.5p, WH Smith (SMWH), down 1% to 1,524p and Conviviality (CVR), down 0.9% to 214p.

Yesterday in the City

It’s been a terrible couple of days for Ocado as 20% has been wiped off the value of the stock.

Ocado was down another 7.6% yesterday to 257p despite its solid set of quarterly results on Tuesday as investors have been shaken by CEO Tim Steiner’s warning the margins will continue to come under pressure, the lack of progress on signing up international partners and the looming UK threat of Amazon Fresh.

Overall it was a relatively calm day in the City with the FTSE 100 edging up 0.1% to 6,673.3pts

Grocery risers included Booker Group ahead of its trading statement this morning, rising 1.4% to 177.8p. Hilton Food Group (HFG) and McBride (MCB) were both on the up after positive results over the past week, rising by 3.6% to 611p and 1.7% to 183.5p respectively.

Also rising was Compass Group, which was up 1.1% to 1,440p.

Fallers included Marks & Spencer (MKS), down 2.1% to 321.8p, Cranswick (CWK), down 2.4% to 2,273p, B&M European Value Retail (BME), down 1.8% to 261.6p and PayPoint (PAY), down 4.9% to 989p.

Crawshaw Group had already dropped by 8.1% to 73.5p before this morning’s announcement.

Topics