Wm Morrison has posted its strongest set of figures since its problematic purchase of Safeway in 2004, returning to profit and delivering the clearest sign yet that it has turned the corner.
Shares in the supermarket group leapt 8 per cent to 251.5p, just off the highs last seen when it sealed the £3bn acquisition, after its interim profits beat City expectations and analysts upgraded their full-year figures.
Sir Ken Morrison, who is preparing to leave the company started by his father, held out the prospect of restoring the group's formerly industry-leading margins after it surprised investors by delivering in six months most of the margin growth it had targeted over the next three years.
"We have every confidence we haven't lost the ability to prosper as we have in the past. The objective is certainly to match where we used to be," Sir Ken said.
Whether the group gets there will depend on its new chief executive, the former Heineken director Marc Bolland, who is three weeks into his new role. "Our task is to deliver a sustainable business model that will deliver growth and returns to shareholders for the long term," he said.
The Dutchman was reluctant to spell out his first impressions, preferring to wait until he has finished a six-month review of the firm. "As they say, sorry, we say in Yorkshire, 'if there is nowt to say, say nowt'," he said. But he added: "I'm not reviewing to revolutionise... It's more building upon rather than changing things."
Every aspect of how Morrisons operates is under review, from its preference to own many of its suppliers to the network of small stores it inherited from Safeway from which it is still struggling to make enough money to justify hanging on to them.
Yesterday, the group posted interim pre-tax profits of £134.2m compared with losses of £82.1m during the same period a year ago. This was despite turnover remaining flat at £5.85bn, reflecting the loss of sales from 66 stores it has sold in the past year. Since the half-year end, like-for-like sales excluding petrol have increased by 5.9 per cent.
Richard Pennycook, the finance director, said the group would deliver "the majority" of the 90-basis point gross margin improvement it had previously promised to achieve over the next three years.Reuse content