Super Thursday and a tale of two retail giants

Morrison's to shed 900 jobs as it pulls down shutters at 11 stores

Shares in the fashion chain rose 2 per cent as profit came in ahead of City expectations (Reuters)

Morrison’s is set to close 11 stores with the loss of around 900 jobs bringing the total lay-offs since new chief executive David Potts arrived in March to more than 1,600.

Mr Potts, who said the sites were “part of the problem” in his turnaround strategy, also warned that the new national living wage would cost the supermarket “tens of millions” of pounds.

He refused to rule out further closures – although none are currently planned – explaining that he is still reviewing the company’s portfolio of 500 stores.

The move follows the sale of Morrison’s convenience stores business on Wednesday to the retailer Mike Greene, who will take on 2,300 staff from the shops. Morrison’s have also cut 720 jobs from head office and 430 jobs went from 10 stores shut in January under the previous chief Dalton Philips.

The decision also came as the UK’s fourth-biggest supermarket failed to impress the City by missing its targets, with first-half profits sliding 47 per cent to £126m, partly due to restructuring costs of £87m.

Like-for-like sales fell 2.4 per cent, which was an improvement on several quarters of declines closer to 7 per cent, but Mr Potts refused to say when he thought sales might start growing again. Total sales fell 5.1 per cent to £8.1bn.

Meanwhile the chief executive warned that the Government’s impending national living wage of £9 an hour for over 25-year-olds by 2020 could increase the company’s pay bill by several million pounds.

He said: “I’m personally working on this and we had been in discussions on this matter before the Chancellor’s announcement. It’s very important our front-line staff earn as much as they reasonably can do. The cost on our side for the new wages is in the tens of millions rather than single-digit millions.”

Mr Potts also unveiled a six-point plan to improve Morrison’s fortunes, as it continues to lose customers to discounters Aldi and Lidl. Pricing will be reviewed, including the company’s card scheme, Match & More, which matches what rivals charge. Mr Potts said many customers had complained it was too complicated and could be scrapped.

He is also cutting back on the number of promotions, with two or three at the end of each aisle instead of the typical seven or eight.

Managers in stores will be given greater autonomy to decide what products to stock on the shelves, depending on what local customers want.

Mr Potts explained: “In the end there’s such diversity within Britain and within Morrison’s stores – so when it comes to trade, it should come down to the local managers. Victoria Market, Bradford, would have a different demographic to Wood Green, London. It’s not possible for a headquarters to understand nuances with regards to ranges.”

He is also in discussions about bringing in third-party operators to fill space in stores with new offerings, such as mobile phone and tablet repairs. However, Mr Potts insisted that the popular cafés would remain.

Meanwhile, the new company behind Morrison’s 140 former convenience stores – rebranded as My Local – has signed a £1bn five-year agreement with Nisa to supply the new business.