Profits plunge hits Morrisons

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The supermarket chain Morrisons today unveiled its three-year plan to revive the business, after profits fell 81% in the wake of its £3 billion takeover of Safeway.

The UK's fourth largest grocer set itself a goal of eliminating £30 million of central costs, and a further £30 million on its distribution network by 2009.

Many employees who leave the group will not be replaced this year as Morrisons strives to save six million "staff hours" in its stores.

It also vowed to strengthen margins and compete with rivals on price so that it could boost sales, which totalled £12.1 billion in the 12 months to January 29.

Pre-tax profits of £61.5 million were at the lower end of the range of the £50 million to £150 million guidance that Morrisons gave in a profits warning last June.

The haul was sharply lower than the £332.2 million profits that the supermarket banked last year.

Chairman Sir Ken Morrison said: "The results we are presenting today are the outcome of an extremely challenging year for Morrisons."

But he insisted that strong foundations had been put in place for the future of the group, which took on 5.5 million new customers when it swallowed Safeway in 2004 and converted 220 of its stores.

"The optimisation plan, outlined today, lays out the steps we need to take over the next three years to enable the company to apply and adapt where necessary the original Morrisons model to the new, larger business," Sir Ken said.

"I am confident that the plan will quickly deliver significant improvements in performance."