Pain and very little gain as Morrison's struggles

Outlook

Sticking with the aforementioned Morrison’s, its pain is continuing. Having sold off its loss-making convenience stores business that did at least offer the prospect of some growth, it added 11 store closures to the divestitures alongside a fairly grim set of results, which saw profits falling by nearly a half. Sales also moved in the wrong direction.

The brief ray of sunshine that emerged shortly after David Potts’s hiring as chief executive seems to have been quickly obscured by the cumuli aldi-lidlcous clouds that continue to shroud the grocery sector.

Mr Potts has at least formulated something of a strategy. Morrison’s is going to focus its efforts on its core traditional supermarkets, hoping that emphasising its fresh food offerings while hiring extra staff to smile at customers will tempt the latter back.

As such, it is rather swimming against a consumer-driven tide, which has made online shopping and convenience stores the fastest-growing parts of the market. Online, convenience and price discounters that is.

Morrison’s is “investing” in price. The question is whether it has the capacity to do so to the extent required to spark a recovery. The firm does have its believers. Analysts at Jefferies see Potts of gold somewhere over the rainbow. They have Morrison’s as their top tip in the sector, citing its potential as a recovery play. Most see rather harder going along its yellow brick road.