The troubled Morrison supermarket, today signalled a turnaround in fortunes by reporting profits up 66% and a pledge to return £1 billion to shareholders over two years. The capital return, through a share buy-back, was announced as the supermarket chain's veteran chairman, Sir Ken Morrison, confirmed that he will retire from the company from today.
Morrisons began to struggle after difficulty integrating rival Safeway, which it acquired in 2004. The company said pre-tax profits rose from £369 million to £612 million for the 12 months to February 3, 2007, on total sales up 6% to £13 billion. Like-for-like sales rose 4.6%, a fall on 5.2% in the previous period. Total dividend increased 20% to 4.8p, up from 4p.
Morrisons plans to open eight new stores in 2008 and extend 19 with an additional 100,000 square feet of selling space.
Keith Bowman, an analyst at Hargreaves Lansdown, said that “all the group’s key financial metrics were moving in the right direction, noting that its shares had out performed rival Tesco by 13.5% in the last six months and that the acquisition of Safeway was now behind it. However, the remaining management at Morrisons will know that they cannot afford to be complacent, today's success comes from a low starting base and the comparatives will become much harder going forward. In addition, UK consumers under pressure from numerous angles will not prove easy to satisfy.” (source: Timesonline)