Profits fall at Morrisons
British retailer to move into online grocery to better compete with rivals
Britain's fourth biggest grocer Wm Morrison today said it would launch an online food offer by January 2014 to better compete with rivals as it posted its first fall in full-year profits for six years.
Unlike the other grocers that make up Britain’s so called “big four” - market leader Tesco, Wal-Mart’s Asda and J Sainsbury - Morrisons currently does not have a website for the home delivery of food.
It said today however that it was in talks with British online grocer Ocado which could lead to some sort of partnership deal.
The results reflected the need for a change.
The group made an underlying pretax profit of £901 million (€1.04 billion) in the year to February 3, in line with analysts’ consensus forecasts but down from the £935 million made in the 2011-12 year.
Morrisons did, however, raise its dividend for the year by 10 per cent to 11.8 pence.
“We have implemented a range of measures to address this. Today’s announcement that we are launching an online food offer in 2014 is another important step.”
Many of Britain's grocers are finding the going tough, despite their focus on essential goods, as consumers cut back on spending due to fears over job security, a squeeze on incomes and government cuts.
Bradford, northern England-based Morrisons has also been losing market share, partly due to its lack of an online offering, but also due to its limited convenience store business and the growth of discounters such as Aldi.
Its share fell to 11.8 per cent in the 12 weeks to February. 17 from 12.4 per cent a year earlier, according to market researcher Kantar Worldpanel.
The convenience store market is growing at about 6 per cent a year, while the online food market is growing at about 20 per cent - channels long exploited by Morrisons' rivals.
In response, Morrisons has also stepped-up its investment in convenience stores. It said its first 12 M local stores were performing well and it has recently acquired 62 sites from the administrators of Jessops, HMV and Blockbuster.
Philips has said Morrisons needs to do a better job of telling customers how its products and service beat those of other supermarkets, in particular by pointing out its more than 5,000 trained butchers, bakers and fishmongers, and needs to make its promotions stand out.
Shares in Morrisons, down 10.5 per cent over the last year, closed yesterday at 271 pence, valuing the business at £6.3 billion.